Adapting Risk Management for a Changing Workplace

Risk managers must evolve in an ever-increasingly complex and dynamic business environment. This includes adapting risk management strategies, fostering partnerships, leveraging technology, and utilizing data to meet emerging challenges.

“Today’s pressures are multifaceted, whether it be economic uncertainty, global expansion, wage inflation, supply chain disruptions, cyber threats, or rising insurance costs,” said Mark Walls, Chief Marketing Officer at Safety National. “Risk managers have to reassess their strategies as a result, including how they evaluate risk tolerance, legacy claims, and risk financing structures, like captives.”

Navigating Market Trends and Challenges

Though some rate relief is emerging, general liability and auto liability insurance remain challenging. Increased litigation funding and legal system abuse are driving exponential liability claims costs. Increased rates and more heavily scrutinized terms reflect these rising jury awards. Proactive risk management to address these difficulties may include exploring alternative capital strategies and innovative risk financing structures to negotiate better terms with carriers. It is also critical not to underestimate the randomness and severity of these losses, even for well-managed organizations. Risk managers should fine-tune their safety programs, with a keen focus on fleet driver training, cyber threats, and sexual abuse and molestation, all of which have seen a significant increase in their associated claims.

Prioritizing Partnerships

Internal engagements with departments like finance, sales, and compliance can help promote an organization’s risk-aware culture, especially when decisions are supported through education and data. Externally, leveraging TPA and broker partnerships for insights, pilot programs, and safety resources can be extremely beneficial. When all parties are aligned, it can reduce friction and improve claims handling. Most importantly, for the foundation of a successful collaboration, all parties must mutually respect one another, share goals, and keep lines of communication open.

Harnessing the Power of Data and AI

One of the most transformative forces in risk management is the use of data and analytics. Using industry-specific data can refine safety measures, improve pricing leverage, and evaluate risk appetites. Analytics can help organizations decide when to retain or transfer risk and identify trends by segment. Data sources matter, though. For example, much of the workers’ compensation insurance industry relies on the National Council on Compensation Insurance (NCCI) for data. However, this can be an insufficient source for the self-insured market, which is absent from their reporting. Embracing new technology can also enable faster and more intelligent risk management decisions. Wearable technology, virtual forklift training, and AI pilot programs to analyze claim data and medical documentation can provide critical data, necessary to improve safety training and create efficiencies in claims management.

Navigating International Risk

As companies expand globally, managing international exposures has become increasingly difficult. Risk managers should work with global advisors who understand local regulatory and coverage nuances. Each country has unique requirements, such as “cash before cover,” which differs significantly from U.S. standards. This principle requires insurers to receive payment on a premium before they can guarantee coverage or issue a policy. Relying on a trusted network of experts with local knowledge is crucial to avoiding costly compliance mistakes.