2018 RIMS

Risk Executives Must Keep Up with the Pace of Disruptive Technology

This year's Excellence in Risk Management report reveals a gap between awareness of new technologies and the ability to employ them strategically.
By: | April 13, 2018 • 4 min read

While risk managers don’t need to know everything there is to know about disruptive technologies such as AI, Blockchain and the Internet of Things, they do need to understand the full scope of opportunities and challenges these innovations present for the organizations they serve.

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As the pace of change moves ever-faster, it’s time for risk professionals to “lean in” to those changes and help their companies stay on the cutting edge. That’s a key takeaway of the Excellence in Risk Management Report XV: Maintaining Relevance Amid Technology Disruption, published by Marsh and the Risk and Insurance Management Society.

The report shed light on the gap that exists between the awareness of disruptive technologies and the implementation of processes to deal with them from a risk management perspective, said Brian Elowe, chief client officer, North America, Marsh.

“Risk management doesn’t appear to be keeping pace with the implications and the associated risks that are emerging from advances in applications of technology and digital capabilities,” he said.

In fairness, he said, the pace of change is extreme. But the report is a call to action for the risk community to meet that pace.

The report is based on nearly 450 responses to an online survey and a series of focus groups with leading risk executives conducted between January and March of 2018.

“Get involved, help drive the conversation. Not just about the risks and what to do about them, but also how risk management can help the organization understand all of the potential opportunities.” — Brian Elowe, chief client officer, North America, Marsh

Overall, survey respondents felt they didn’t have the expertise to act as strategic advisors on disruptive technologies. Of those using these technologies, less than half felt their level of understanding was at a strategic level.

At least 29 percent of respondents said their organizations were using AI, and another 18 percent were actively exploring its use. Yet of those using it, only 12 percent knew what it was being used for.

Blockchain was being used by 11 percent of organizations, yet only 3 percent of risk professionals knew the specifics of how it was being implemented.

Of those that did know, 70 percent were using Blockchain for supply chain management, while 50 percent were using it for payments and settlements and 30 percent for claims management.

Use of the Internet of Things is more widespread. At least 59 percent said their organizations used or planned to use IoT. Still — 25 percent were unsure of the specifics of how it was being used.

It’s incumbent upon risk professionals to reach out within their organization to get a better handle on which technologies are being used in their organizations and how they are being used. Those who don’t do so run the risk of being left out of decision making. Worse, they may fail to foresee risks or develop adequate strategies to mitigate them.

Only 14 percent strongly agreed their organizations have a clear process for identifying and addressing the risks of new technology before it’s implemented. Nearly half were unclear about their technology risk management process.

Time to Get in Step

While there may still be a steep learning curve on new technologies, risk professionals are more confident than ever on their grasp of cyber risks and cyber coverage.

At least 78 percent said they grasp how the legal liability of cyber risks would affect their organizations. Only 5 percent were still unsure.

Additionally, 75 percent said they understood how their insurance coverage would apply to cyber claims, while only 7 percent did not.

The cyber market also saw a high level of satisfaction with claims outcomes. While only 20 percent reported having cyber claims in the past 36 months, 76 percent of them were satisfied or extremely satisfied.

Overall claims satisfaction was high across several lines, including product liability (79 percent), workers’ compensation (76 percent), general liability (78 percent), auto liability (78 percent), and professional and financial liability (74 percent).

That said, it’s worth paying attention to the fact that 40 percent of respondents said they would consider switching carriers or other advisors based on their ability to provide innovations in the claims arena. Another 43 percent said they wouldn’t rule out such a move.

Asked what area of the claims management process needed the most improvement, 62 percent wanted to see a reduction in the overall claims costs. Also at the top of the wish list for at least a third of respondents: Closing old claims, integrating technology innovations and simplifying the claims process.

To help move their organizations to the next level and stay on track with developing technology, the report advises risk professionals devote extra time to educating themselves on emerging technologies. Risk executives can deliver value to their organizations by providing higher-level insights and analytics related to emerging risks.

Think creatively about the application of new technology in terms of managing risks as well as improving claims management.

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“Risk management is becoming more involved in the strategic direction of organizations,” said Elowe. “Instead of just responding to risks that are coming at the organization, we see more advanced risk management operation actually getting involved in strategic planning and becoming an exporter of knowledge to product development areas and other areas in terms of risks that need to be managed or mitigated.”

Risk executives now understand their role as an enabler of their company’s business, he said, and this is an area where they can demonstrate it.

“Get involved, help drive the conversation,” said Elowe. “Not just about the risks and what to do about them, but also how risk management can help the organization understand all of the potential opportunities.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]