A big factor, perhaps easy to overlook, is the change in the role of the risk manager. Risk managers these days are expected to have a handle on any of the risks that could hit the company's bottom line, not just those risks that are insurable.
As risk managers have moved from being "just" insurance buyers to managers of enterprise wide risks, their needs have changed as well. Basic claims and policy information are no longer enough. And so risk managers are pushing RMIS vendors to give them more information as they try to manage an expanded set of risks.
"Our customers are challenging us every day on how we can do more, how we can think more broadly and support their initiatives," said Bill Diaz, president of CS STARS, the RMIS operation of Marsh.
"The importance of risk management and what we're being asked to provide on behalf of our customers is going to expand," Diaz said. "The more information they have, the better decisions they make and the more impact they have on their organizations."
The economic meltdown in 2008 illuminated this. Companies that thought they were doing a good job of managing their risks found out otherwise. Other companies have emerged as survivors but were still chastened by the events that unfolded as the economy went into a tailspin.
And now there is also the specter of more government regulation, which is likely to raise compliance risk.
All of this has led to an increase in interest in risk management tools that can help uncover potential problems and help companies manage their compliance risk.
To help enforce corporate best practices and tighten decision-making, companies are seeing more need for audits and risk controls within their operations that go beyond day-to-day processes and procedures," said Eric Wild, executive director of strategic product delivery at CS STARS.
Tight budgets might keep a lid on interest in the short term but longer-term demand is expected to be strong.
Risk managers are also pushing for more information about external threats. For years, the focus was on internal risks. But as the role of risk manager has evolved, information about external threats is of increasing importance.
Companies that have good information about external threats, such as hurricanes, earthquakes and terrorism, can take action. A company that knows a hurricane is bearing down on certain facilities can make changes and minimize losses. An investment house that has information about severity of damage from an earthquake can get an edge in the markets.
CS STARS has already released a series of applications that can provide users with information about these kinds of external threats. It's an area that CS STARS expects will grow as risk managers come under more pressure to be on top of risks and to be prepared to respond to questions about their impact.
Risk managers have more risks on their plate than ever before. Tools that help them identify those risks quickly and manage losses efficiently will be in demand. And the 2008 economic downturn was a wake-up call for how critical risk management information can be.
PATRICIA VOWINKEL has worked for national media outlets for more than 20 years.
May 1, 2010
Copyright 2010© LRP Publications