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Digital EditionWhy The Institutes’ CEO Pete Miller Thinks a Predict & Prevent Focus Will Revolutionize the Way Society Approaches Risk
Peter L. Miller, CPCU, MS, MBA, is president and chief executive officer of The Institutes Risk & Insurance Knowledge Group and a member of its Senior Management Team.
Benjamin Franklin, in urging a more robust approach to firefighting in Philadelphia, wrote: “an Ounce of Prevention is worth a Pound of Cure.”
Today, nearly 300 years later, we see again that prevention is needed. In fact, the National Institute for Building Science estimates that every dollar spent on prevention saves six dollars on recovery.
Traditional risk management, which relies heavily on risk transfer and detecting and repairing after a loss occurs, is no longer adequate to keep up with the colossal forces transforming the risk landscape — and society.
These influences are volatile and complex and include climate risk, technological revolution, societal trends, macroeconomic reversals, legal system abuse and political upheaval. And as the levels of risks are increasing, so too are the levels of loss severity, creating the potential for insufficient insurance capital to cover the growing magnitude of losses with risk transfer alone.
We need that ounce of prevention.
I believe we need a new focus and commitment to Predict & Prevent, which is an emerging strategy for risk management that focuses on harnessing the power of technology combined with prioritizing resiliency.
The goal is to find and prevent losses from happening. While this sounds simple, the reality of producing meaningful change is daunting.
Risk managers and insurers have always focused to varying degrees on “risk mitigation,” “loss prevention” or “risk engineering.” From this perspective, it would be easy to view Predict & Prevent as an evolutionary approach.
But two critical factors position Predict & Prevent to be much more impactful.
First is the existential urgency created by the more severe climate risk landscape and insurer capital pressures. The global economy requires a foundation of insurance to function, but unless there is action taken to promote a more collective responsibility to how and where we are living, and to modify existing and future physical infrastructure, there simply may not be enough capital available to assume the risk for foreseeable losses.
Second is the adoption of emerging technology and innovation that can significantly improve loss prediction and prevention. A wide range of solutions today show promise for gathering and analyzing data to identify risks in real time and at a granular level. Novel approaches to resiliency in the face of risks also offer improved opportunities to greatly reduce losses.
Addressing the urgency and capturing the full benefit of emerging solutions requires collective responsibility; no single entity can meaningfully address the problem alone. This is where The Institutes can significantly add to the discussion.
As one of the largest and most extensive not-for-profits dedicated to societal risk management and insurance, we can help to align the efforts of insurers, policymakers, tech innovators and consumers.
At The Institutes, our role is to Educate, Elevate and Connect the insurance and risk management community, and our efforts on Predict & Prevent are emblematic of that. To drive greater awareness of the need for Predict & Prevent, The Institutes is launching a podcast in early 2023, that I will host. Readers interested in learning more can subscribe to The Institutes’ Predict & Prevent™ podcast and be sure to check out predictandprevent.org for the latest updates. More details are included below for those interested in learning more.
I hope together we will work toward a more effective response to the changing risk landscape. &
Coming Soon: Predict & Prevent
An emerging strategy of harnessing technology and prioritizing resiliency to combat the biggest risk challenges facing society. Host Peter Miller, president and CEO of The Institutes, and leading experts will examine how traditional risk management, which relies heavily on insurance and detecting and repairing after a loss occurs, is transitioning to Predict & Prevent to keep up with a changing risk landscape. The eight-episode season will establish what a Predict & Prevent strategy means, why it is urgently needed and provide a view to the future of risk management.
Available soon at Spotify, Apple Podcasts and other listening platforms.
