A general lack of understanding of available alternative risk solutions is hindering many risk professionals, according to a report from Marsh and RIMS.
The 16th Annual Excellence in Risk Management report found that risk professionals are hindering opportunities from a lack of understanding of available alternative risk solutions and effective use of data and analytics.
The report found that 47 percent of risk professionals rank improving the use of data and analytics as their top priority for improving risk management capabilities.
It also revealed that 33 percent of risk professional respondents and 53 percent of executives surveyed said they need to learn more about alternative solutions before making a decision whether to use one.
But the data rich environment in which risk managers are operating, combined with growing alternative risk solutions, could result in more robust risk finance strategies and more resilient organisations.
Both Marsh and RIMS state that the report’s findings emphasise that data-driven modelling is “critical as companies need to compare traditional insurance against alternative solutions to clearly understand the value each provides”.
The report also revealed that financing hard-to-insure exposures were the top benefit of alternative risk solutions cited by 39 percent of survey respondents.
Cost and explaining the benefits to others in an organisation were cited as the two main obstacles to using alternative solutions by 31 percent and 30 percent of respondents, respectively.
Brian Elowe, North American CCO at Marsh commented: “By effectively marshalling data and risk modelling tools, organizations can better understand changes in their risk profiles and risk-bearing capacity allowing them to access the opportunities presented by the growing levels of capital available for risk finance.”
Carol Fox, vice president of Strategic Initiatives at RIMS, added: “Expectations for risk management professionals to deliver strategic solutions has never been greater. Now is the opportune time to integrate new technologies for accessing ‘real time’ data to inform business and risk-taking decisions, as well as lead in the development of innovative finance solutions to transfer risk.”
The figures from the report were released at the RIMS 2019 Annual Conference & Exhibition in Boston.
