Risk Insider: Jack Hampton

Do You Know the Difference Between Business Intelligence and Business Analytics?

By: | July 16, 2018 • 3 min read
John (Jack) Hampton is a Professor of Business at St. Peter’s University, a core faculty member at the International School of Management (Paris), and a Risk Insider at Risk and Insurance magazine where he was named a 2018 All Star. He was Executive Director of the Risk and Insurance Management Society (RIMS), dean of the schools of business at Seton Hall and Connecticut State universities, and provost of the College of Insurance and SUNY Maritime College in New York City.

People who drink three cups of coffee a day live longer. This finding is based on a 2017 study of 500,000 people from 10 European countries.

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In a recent period, the U.S. annual rate of inflation ranged from 2.5 to 4.0 percent. The data on annual rises in skin cancer in the same period was almost identical. Maybe inflation causes cancer.

Monmouth County, N.J., has 10 large shopping malls. A recent statistical assessment of its criminal activity showed the area to be one of the most-crime ridden places in New Jersey. Shoppers might be in danger.

Rob Wielgus, a Washington State University professor, published data showing a correlation between wolves and livestock. Killing wolves in one year may cause wolves to kill more livestock in the next year.

What do these statistics and their conclusions tell the risk manager? Drink coffee? Avoid cancer by moving to low inflation areas? Shop in New York? Do not annoy wolves.

Or perhaps they tell us something about risk when we try to make sense out of data and statistics.

Toys “R” Us was an iconic brand with a steady loyal customer base of parents and kids. It had access to tons of data on the desires and needs of customers but an inadequate understanding of how to respond to changing consumer preferences and market trends. It closed down in 2018.

Drinking coffee may help you live longer. Or it may reflect a habit of exercising and healthy eating by coffee-drinking Europeans. Linking inflation and skin cancer is nonsense. Monmouth County crime data mostly reflects shoplifting. The relationship between wolves and livestock may be complicated.

Misleading relationships in data and statistics, whether fallacies or lies, is old news. What is different is the growing risk when raw data is collected and used to make key business decisions.

In this context, we have growing amounts of data extracted from other data. Called “megadata,” an example occurs when thousands of people who post Facebook photos of family vacations are statistically correlated to the likelihood of them making other leisure purchases.

The danger arises when we fail to distinguish between business intelligence (BI) and business analytics (BA)

  • Business Intelligence (BI). Analysis concerned with measuring past performance and identifying things that worked and things that did not.
  • Business Analytics (BA). Analysis that extends BI so we convert data into actionable intelligence.

The risk management challenge is to create reliable and valid relationships from unreliable megadata. The question for risk managers, “Is your organization correctly distinguishing business intelligence (the past) and business analysis (the future)?”

In a nutshell, this is the problem. BI is often performed by bright young analysts without an understanding of the business of the organization. This can produce misleading conclusions.

Blockbuster and Netflix both had access to the same tools and data in 2004 when Blockbuster had 58,000 U.S. employees working in 4,500 stores. Netflix saw the future of streaming. Blockbuster did not and filed for bankruptcy in 2010.

Toys “R” Us was an iconic brand with a steady loyal customer base of parents and kids. It had access to tons of data on the desires and needs of customers but an inadequate understanding of how to respond to changing consumer preferences and market trends. It closed down in 2018.

Surely Blockbuster and Toys “R” Us had extensive business intelligence at work. Maybe the shortcoming was business analytics.

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Along with studies of Borders, Sports Authority, Kodak, and Circuit City, we can see the growing danger of misjudgments as we bring in data from all sides. The situation is becoming more complex as a result of the risk of the Internet of Things (IoT).

Done right, data and statistical analysis give us insight into key relationships in the past and can drive business planning. Done wrong, it can be a disaster.

We might conclude with a caution that not everyone likes correct business analytics. Ask Professor Rob Wielgus. Ranchers and politicians wanted to kill wolves so his statistics were scorned. His enemies even commissioned other analysts to present contradictory results using his own metadata. Wielgus was pushed out of WSU a few months ago.

Who can say business analytics isn’t dangerous?

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]