Need for Risk Management Programs for Securing Organizations
How has the risk management technology landscape evolved in recent years, and what are the current market trends in the space?
Having worked at various Fortune 500 companies, I witnessed that employees are not necessarily qualified for risk management. As a result, companies often fail to assimilate that they have embraced fragile insurance practices. If a business has lousy financing, accounting, and marketing, they can quickly assess it by analyzing their cash flow or reports. But, with risk management, companies do not realize that they have enough insurance coverage until they claim. Organizations often buy a terrible insurance product, and they never know until requested for a claim. Thus, firms overlook risk management as they experienced trauma in order to embrace it.
Universities should devise various insurance programs and spread awareness about the importance of formal educations of risk management
What are the challenges in the risk management landscape?
No one talks about the fact that there is 2000 accounting, 1000 finance, and 83 insurance or risk management degree programs, putting out 5000 graduates for several hundred thousand jobs in the insurance landscape. Absence of talent in the risk management marketplace was highly witnessed during the 2008 recession; many insurance companies were incorporated to protect various firms from going bankrupt but struggled to get domain experts.
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In the ever-changing risk management market place, what would be the ideal solution to address such challenges?
Universities should devise various insurance programs and spread awareness about the importance of formal education with regard to risk management. Most of the employees hired in insurance companies do not possess a degree in risk management or other similar programs. Thus, to change the status quo, I became the director of the Davey Risk and Insurance program at Butler University. We created a four-year degree in risk management insurance from the ground up, and over the last eight years, we have continuously increased our enrollment and are currently teaching 76 students. The sole motive of my career was to assist universities, industries, and students in understanding the potential of formal education in risk and insurance. However, it does not mean that one needs a risk management degree to be successful in the insurance industry. Some people pursue insurance career through experience and training, but in the current scenario, where the demand for talent is increasing, we need to improve the pipeline and deliver outstanding graduates. At Butler University, we help establish a pool of talent to support insurance organizations.
Where do you think the risk management landscape is heading, and what can we expect in the future?
In the last two to three years, technology such as the Internet of Things and blockchain has changed the risk management marketplace and increased the productivity of insurance organizations by streamlining several workflows. Technology is going to help insurance agents, brokers, and underwriters by making them efficient in their day-to-day activities, but at the same time, it will disrupt the insurance landscape with advanced risk management products. Insurance firms have to stay abreast with the latest trends and update their knowledge as well as products for making solutions relevant to various business operations. Advanced technologies such as these have the potential to put reinsurance brokers out of business, as we could witness a digital process for securitizing insurance risk that would rival the traditional practices.
Today, insurance tech companies usually are inclined toward tech and are ignorant of risk management knowledge. Consequently, these firms are disrupting insurance processes that do not need any change and are overlooking the challenges that require to be revamped. It is a massive opportunity for Butler and our students to devise innovative products and disrupt the insurance industry. We at Butler University are making great strides with its student-run Captive Insurance Company to equip students and allow them to gain hands-on experience. This has enabled us to introduce technologies associated with the future of insurance. We can be the laboratory for insurance technology solutions to invent and deliver risk management products never seen before. We are working with firms to help develop different risk management applications using geotags from their drone mapping technology.
In this data-driven world, firms can use geospatial data and explore new opportunities and make accurate risk prediction and devise investment policies that business and people can subscribe to. However, despite obtaining a plethora of data, organizations are not able to start a new insurance venture due to the absence of risk management expertise among their employees. If one is properly educated and trained, they can do all kind of things that most people do not think are possible because they have never been adequately educated.
Although technology will streamline some of the risk management business operations such as reinsurance to auto insure vehicles, property, and life. But, several other variables need to be considered, which requires manual assessments of risk to formulate new insurance products.
Would you like to convey any message to organizations for staying ahead of the curve in the risk management space?
Getting a specialization in risk management is one of the most important aspects to understand how the landscape works, and then, innovative solutions to mitigate challenges. The risk manager is the only discipline of business, where one might help someone to go home at the end of the day and not get hurt. Besides, technology is going to revamp the insurance process but not necessarily going to digitize the workflow entirely. As a result, there will be winners and losers; some insurance technology company will unfold as a part of the new ecosystem, and a few legacy providers will adapt and be part of it. Whichever side of the industry you end up on be it legacy side or insurance technology side, there has never been a better opportunity than it is today.