From Tech to the Talent Gap, Here’s What Tomorrow’s Risk Managers Should Prepare For

As technology evolves, risk managers will need to be more agile than ever before as they develop creative risk solutions for the future.
By: | April 24, 2020

It’s 2040, and instead of a risk management department, a construction company has a highly intelligent robot that assesses and manages all of its risk. 

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Drones and other video technology pair with a software that analyzes historical data to assess the risks of a particular site. 

Wearable technology analyzes a worker’s every movement and generates reports daily for managers to address safety risks.  

The artificial intelligence (AI) technology that could produce a robot capable of analyzing and mitigating all risk on its own doesn’t exist just yet, but the idea of a digital platform capable of quickly collecting and analyzing data is emblematic of the kinds of tools that may be available to future risk managers.

With new technologies come new risks, however, and AI and the Internet of Things aren’t the only rapidly changing risk landscapes in modern society. Global climate change and geopolitical crises are both risks that risk managers will be contending with 10 to 15 years from now.

“The world is just moving much faster than it was 30 years ago,” said M. Michael Zuckerman, an associate professor of risk, insurance and health care management at Temple University. 

“Risk managers have to be more than flexible. They have to be intelligent and insightful. Information comes at a risk manager quickly, especially in a crisis. The risk manager must be able to absorb information, critically analyze it and make decisions more quickly than 30 years ago.”

To prepare, today’s risk managers will need to focus on training the next generation to have the mental agility to manage these risks. They’ll also need to work on recruiting new talent into the industry as the predicted talent gap rapidly approaches.  

The Risk Landscape of Tomorrow

The risk landscape 10 to 15 years from now will look very different than the risk landscape of today. Some risks, such as increased CAT events that stem from global climate change or the ever-changing regulatory landscape, will likely look familiar, but others, including those related to new technologies, will be completely alien to us. 

By far and away, risk managers and university risk management professors identified new technologies and cyber threats as being one of the biggest contenders of risk that future risk managers will have to understand. 

“We need to make sure that as we think about risk in the future, how can we harness AI to be of value for not only the functional area of risk but also for the organization? How do I incorporate predictive analytics into my mindset?” said Phil Renaud, executive director of The Risk Institute at Ohio State University. 

To manage these new tools and technologies, risk managers will need to up their game.  

Annette Kurtzweil, chief risk officer, Swiss Re Corporate Solutions North America

“Risk managers will have to be more agile than ever before in history,” said Annette Kurtzweil,  chief risk officer for Swiss Re Corporate Solutions North America. 

“The risks are way more connected than ever and that is changing how risk consumers and risk owners think and behave.”

As technology changes, the way companies think about and purchase insurance will also change. Zach Finn, director of the risk management program at Butler University, believes that as technology becomes more advanced, companies will turn towards captives and self-insurance programs. 

“I see a world where there’s going to be a lot less insurance and a lot less need for insurance. When technology gets good enough to drive actual risk behavior, I don’t think you need an insurance company necessarily to be the intermediary for that anymore. If you think about it, why wouldn’t you become an insurance company?” Finn said. 

“The next evolution from traditional risk management to enterprise risk management will be what I call monetized risk management. I think in the next 10 to 15 years, risk managers will be looking to monetize their risks.” 

Educating the Next Generation

In order to prepare students for the next generation, risk management professionals and educators are prioritizing real-life experiences.  

“Practical, real life training should take place in some of the universities,” Kurtzweil said. “This isn’t just reading a book and learning about it but actually doing real life scenarios and putting case studies in the hands of students.”

Experiential learning is emphasized at The Risk Institute at Ohio State University, according to Renaud. Its program works with businesses from a diverse set of industries to bring real world risk management challenges for teams of students to work on. 

“Risk managers will have to be more agile than ever before in history.” – Annette Kurtzweil, chief risk officer, Swiss Re Corporate Solutions North America

They also conduct business simulation exercises where students respond to simulated cyber security incidents over a two-day period.  

“We believe that it is important for students to engage in case study activities,” he said. 

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Butler University takes a similar approach to experiential learning. The university has a student-run captive that insures the university’s bomb sniffing dog and their 38-inch Cassegrain reflector telescope, among other things. It’s also incorporating a focus on data analytics into many of its courses. 

“The student captive has been very interesting, and it’s really a nice thread across the program,” Finn said.  

Beyond the need to enter the workforce with practical experience under their belts, future risk managers will continue to need to be effective communicators and will need to be empathetic to their clients’ needs. 

“Sometimes technology masks the need to be a better communicator,” Zuckerman said. 

“I often talk with students who say, ‘Well, I’m very quantitative and I’m very good with technology. I can code, I understand artificial intelligence, I understand blockchain technology.’ But still, at the end of the day, you need to be able to talk to people,” Finn said.

“A risk manager cannot be a leader without being empathetic and able to understand how their stakeholders view the world.” 

Will There Be Enough Risk Managers?

Preparing risk managers for future risks will be impossible, however, without risk managers. 

The risk management and insurance talent shortage could leave the industry with 400,000 openings by 2020, according to a report from the Jacobson Group. 

“The talent gap is no secret, obviously,” said Liz Walker,  director of enterprise risk and global insurance for Groupon. “We’re going to need to be reaching more people, we’re going to be facing more risk and we need a lot of different people and perspectives from diverse cultures and experiences to help address these challenges.” 

In order to make sure there are enough professionals to manage the risks of the future, companies may need to look outside of students and universities to fill industry positions. 

“There isn’t just one path to become a risk manager,” Kurtzweil said. “Within our team, we have people with underwriting backgrounds, we have CPAs, we’ve had compliance people. You need that multifaceted mindset to look at risk across the board.”  

In addition to looking for talent in other facets of the industry, Walker said that the risk management and insurance industries will need to rebrand themselves in order to appeal to new talent. 

“I think insurance and risk management is an incredibly sexy field, and most people outside of the industry think it’s the opposite of that,” she said. “I think we should recruit by inviting high school, early college students and talent from other industries to ‘come disrupt us,’ as opposed to trying to recruit them by educating them about insurance and its different lines of business — that will come later.”

Robot risk managers may seem like a pat solution to this impending talent crisis, but risk management professionals and university professors agreed that managing an ever-changing risk landscape requires a human touch.

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“You’ll never get a robot to be able to discern trends in a meaningful way without human involvement and interpretation,” Zuckerman said. “Robots and computers can be used to develop our models to test our proposed solutions, but they’re never going to be able to create ideas like a human being with empathy and intelligence.”  

“We can’t just blindly believe something coming out of a tool,” Kurtweil added.

“We have to be able to question and really challenge things to make sure we understand the risk that the data is presenting to us,” he said. 

“The more I see data, the more I think you need a good risk management team to interpret that data and understand what goes into those analytics and where the blindspots may be.” &

Courtney DuChene is a staff writer at Risk & Insurance. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]