Does your business have access to
all the information it needs to properly manage risk? If you have acquired businesses, run offices
throughout the world or changed insurance carriers, chances are you don’t
have all the information you need at
your fingertips to make good risk management decisions.
“Business owners, risk managers and
CFOs need historical and real-time data
about the risks in their businesses in
order to make effective decisions,” says
Chris Smith, senior vice president of
Aon Risk Services Inc.
One way to do that is to consolidate all
the information under the umbrella of
Internet-based risk management information systems (RMIS).
Smart Business spoke with Smith
about the benefits of RMIS and ways to
determine if your business needs this
technology.
What are RMIS and what do they do?
RMIS are Internet-based programs that
consolidate all kinds of risk information,
from property values, claims and policy,
to global data, certificates of insurance
and self-administered claims management. The beauty of these systems,
which are not a new idea, but are new to
the online world, is that risk managers
can monitor and control a business’s
overall risk. The system allows managers to analyze trends in a variety of
risk areas, which is invaluable to a business and can save a lot of money.
What kinds of problems do risk managers
face without an all-in-one system to consolidate risk data?
The biggest problem most businesses
face is not having efficient access to all
the information needed to properly manage risk. For example, if a business has
acquired another business, it also
acquires its risk. That data usually
resides in another insurance carrier’s
data system.
It gets more complicated if a business
uses several carriers, makes acquisitions, changes carriers and has operations overseas. In that scenario it is not
uncommon to see data in 20 different
locations. This makes it very difficult to
spot trends or make any kind of sense of
the data coming in.
Leasing RMIS from an insurance company is sometimes seen as a solution,
but the problem is that if the business
changes carriers the manager loses
access to that system. Owning RMIS that
are portable to whatever carrier you
happen to purchase insurance from, is
the ideal for many businesses that need
to manage complex risk, particularly in
these uncertain economic times when
the future of some insurance carriers is
in question.
What are the key benefits of having RMIS to
help manage risk?
There are four main benefits:
■ Can easily identify loss trends.
Without the ability to consolidate data,
trends are not obvious. But, with RMIS,
you can identify, for example, a certain
kind of bank injury that is cropping up at
a particular plant or process. With this information, a risk manager can address
and suggest training and ergonomic
issues at those plants to help reduce
injuries and cost.
■ Can manage global accounts online.
Businesses with far-flung operations
know that managing risks is tricky when
each country requires its own local
insurance. While an umbrella policy in
the U.S. covers certain risks, it doesn’t
cover everything; conversely, sometimes
certain risks end up doubly covered
under the local and umbrella policies.
RMIS can be used to track that information to avoid duplication and save
money. It can also, with a touch of a button, see where the risks are in the worldwide locations and how the risks are
being mitigated.
■ Can coordinate self-administered
claims. Self-administering of claims is
common in larger companies for general
and products liability. Even if a business
has carriers administering other claims,
the self-administered portion is incorporated in the RMIS data.
■ Can effortlessly track policy,
deductibles and exposure data. In the
area of deductibles it is staggering how
many times a business will pay a claim
when a deductible has already been met.
Mistakes like this happen all the time
and can cost a business millions of dollars. RMIS will alert the manager when a
deductible has been met. Another area
that RMIS are helpful is in tracking policy data. For example, if you have long-tail claims that stretch back decades,
such as exposure to asbestos, it is able
to keep track of that.
Does RMIS help at all with compliance
issues?
Yes. Sarbanes-Oxley requires that business executives understand and quantify
the company’s potential liabilities. RMIS
are an excellent tool to help managers
consolidate that information quickly and
put that information in the proper format for reporting purposes.
CHRIS SMITH is the senior vice president for Aon Risk Services Inc. (www.ars.aon.com). Reach him at (216) 623-4101 or
[email protected].
Senior vice president
Aon Risk Services Inc.
