Risk managers do not need to depend on brokers to enjoy the benefits of big data. Here are three areas where risk managers can take the initiative and deliver value to their enterprises today:

Telematics: The inexpensive devices which power usage-based insurance in the personal lines marketplace are also widely used in commercial fleet-management applications. The data produced by these devices, properly mined and analyzed, offers great potential to drive risk management initiatives directed at improving the safety of driving practices throughout the enterprise. Telematics provides the foundation for proactive motor vehicle risk management and can contribute to substantial reductions in TCOR.
Workers' compensation: Many large organizations have a significant number of attritional workers' comp claims that fall within their retention. Data about these claims, whether managed through an internal risk management information system (RMIS), offshore captive or TPA, is an asset. Predictive models based on this data can identify factors driving lost activity and suggest risk mitigation approaches to lower claim frequency and reduce cost.
Supply chain risk: The recent Fukushima earthquake highlighted the vulnerability of many enterprises to natural disasters affecting their suppliers. Companies can leverage the data stored in supply chain management systems to quantify and mitigate such risks. This data can be mined to generate geospatial maps of principal suppliers. Property catastrophe modeling software can leverage these maps to calculate the PML for a series of potential supply chain disruptions. Risk managers can respond proactively, chartering supply chain diversification initiatives or purchasing contingent business interruption coverage.

The complexity of commercial lines business makes the adoption of big data approaches more of a marathon than a sprint. The deliberate pace of adoption should not be confused with a lack of momentum. Although it may not be a revolution, big data offers large commercial enterprises significant opportunities to improve both risk management practices and the effectiveness and efficiency of their insurance purchases.

Special Reports /

A Perfect Match: Big Data & the Corporate Risk Manager

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