Even though risk management is a relatively new area for organizations, dating back a few decades at the most, the systems and processes that risk managers use are often outdated and ineffective. This could be the reason your risk management team is having trouble producing actionable information and delivering on results: the system is damaging their efforts. If you have experienced any of the following 10 signs, it may be time to change how you manage risk.
1. You have excessively high costs
The larger your organization, the higher your risks and the costs to manage them. But that doesn't mean high costs are always inevitable.
You may be paying out thousands of dollars in repetitive or easily preventable claims and not even realize it. You can often prevent incidents or minimize their impact, but if you’re not aware of a solution, you will continue to incur costs. For example, the City of Saint John saved $500,000 on claims costs after implementing trend analysis that allowed them to target areas with high incident frequency. Read more in their case study here.
A high claim frequency also increases your insurance premiums. If you can prove to your insurer that you have mitigation strategies in place and the number of incidents is going down, your cost of insurance may decrease in kind.
Add this to the fact that you’re paying salaries to employees to perform a number of tasks that could be automated — why not refocus their efforts on strategic activities instead?
If you need a way to reduce claims costs, it may be time to change how you manage risk. Lower your expenses and use the funds you save to benefit the business.
2. You have difficulties in reporting and analysis
Everyone in an organization, from frontline employees to the CEO, can benefit from monitoring their environment. Monitoring is especially useful for risk management teams: it identifies effective mitigation strategies, which leads to reductions in frequency and/or severity of incidents.
It’s difficult and time-consuming to produce reports on the impact of initiatives when data is spread across multiple locations and employees must manually collect and manipulate it. This troublesome process means users may not regularly create reports. When they do, they may already be out-of-date or inaccurate, which makes it difficult to make any analysis-based decisions.
If you notice that it takes you or your employees a long time to produce the reports you need, have you considered changing how you manage risk? With the implementation of a proper system, employees can produce visual reports with accurate and complete data with the click of a button and instantly analyze trends.
3. You (or your staff) spend too much time on data entry
Accurate record-keeping is crucial for claims and incidents. You need many pieces of data, such as the impacted party’s details, information on the incident, and claim costs. These details are necessary for compliance, follow-up, and i
Manual data collection makes processing this data more difficult than necessary. Are your employees spending hours or even days manually entering claims data into paper files or Excel spreadsheets? Each time an incident is reported by email, fax, or phone, do they retype or copy and paste information?
Not only is data entry mundane and repetitive, it uses employees’ time that could otherwise be spent acting on data and implementing new mitigation strategies.
If data entry is a significant portion of employees' work, it’s time to change how you manage risk. Automatic data entry is now possible, leaving the risk management team free to perform more interesting and impactful tasks.
4. You’re worried about security
Some organizations are concerned about making the transition to external or cloud-based data storage. They fear that data will be compromised once it leaves the office’s direct control. However, multiple studies have shown that the cloud is actually safer.
Risk management teams handle a lot of secure information: confidential personal data, claims details, and payment data are just some examples. What’s the best way to house this information?
Spreadsheets can be password-protected, but users are either locked out of the file or are able to view and edit all fields. This doesn’t enable multiple levels of authority — what if you want a user to be able to view some pieces of data, but not others? If users change the data, there’s no way to determine what changes were made, when they happened, or who made them. These files are also often shared via email, which can be easy for a third-party to intercept and access. Finally, if something happens to the computer or server the file is stored on, the data may not be recoverable.
Paper files are even more unsecure. They can be easily misplaced, intercepted, or damaged beyond repair. You shouldn’t keep crucial risk data in such a temporary format: it’s a risk in and of itself.
If you’re not confident that your system is keeping your information safe, it’d be wise to change how you manage risk. A better system can significantly lower the chances of a data breach.
5. You can’t properly store historical data
One of the greatest issues with Excel spreadsheets is their inability to store historical data in an easily accessible way. Often, fields are erased and replaced with new data, removing the possibility of analysis. You could build massive spreadsheets or multiple versions, but that only creates its own problems when attempting to build reports.
Paper files have the opposite issue: there is often so much historical data that it becomes impossible to process and pull out what is actually useful.
Data is never static, and improper management reduces your ability to identify trends. The result is difficulty predicting future losses and protecting the organization against them.
If you’re seeing similar issues in your organization, think about changing how you manage risk. Data management systems will allow you to store massive amounts of data in an organized, analyzable fashion.
6. You have a lack of real-time data
Data is critical for decision-making. This is particularly true for risk management, where multiple internal and external factors have significant impacts and change very quickly.
The best decisions come from the most current data — ideally data that is updated in real-time as situations change.
However, real-time data can be difficult to access. Paper files and Excel spreadsheets require employees to find time in their busy schedule for data entry, which may not happen for hours or days after an incident takes place. You could make a decision based on your most recent version of a document, not realizing that recent changes are not reflected in the data.
The decision, then, will be based on out-of-date information. This may not have a significant impact in some scenarios, but could be devastating in others. For example, if you make a strategic decision based on the amount of claims costs you’ve incurred in the last quarter, not knowing that the system hasn’t been updated to include the biggest loss to date, your strategy may not be successful.
If your risk decisions are hindered by not having access to real-time data, you need to change how you manage risk. With the latest systems, data is regularly refreshed and you can even get automatic notifications when new data appears.
7. Some of your data is irregular
When employees manually fill in forms or spreadsheets, there’s bound to be irregularities. For example, one employee may write dates as day/month/year while another uses year/month/day. Similarly, some may enter “Ontario”, others “ON”, or if the employee was in a hurry, even “Otnario”. Think you’re immune to these issues? Think again: a study found that up to 88% of spreadsheets have errors, and it’s time-consuming and difficult for employees to identify and fix them.
Another issue is the irregular naming of files. A common challenge is searching for a file only to realize it’s one of 20 named “Untitled Document”. Employees may also give a file a unique name and then forget it, making it difficult to recover.
These inconsistencies are irritating to employees, make data hard to find, and create inaccurate reports. If you’re trying to run a report on the cost of claims in Ontario, for instance, but the search doesn’t pull in data for claims marked “ON”, the result could be completely incorrect.
If you’re experiencing a lot of irregularities in your system, it might be a good idea to change the you manage risk. New systems enable drop-down selection fields and authenticated data entry to eliminate this problem.
8. You’re unable to access data remotely
Your employees are sometimes unable to come into the office because of sickness, bad weather, or countless other reasons. They also work from home to sustain a healthy work-life balance, go on vacation for extended periods of time, or travel across the city, country, or world to meet with coworkers or clients. And how many times have you been out of the office for a day and became frustrated at your limited ability to access information?
Risk spans across all locations of an organization — so should a risk management system. Without the ability to work remotely, employees may fall behind, have to depend on a coworker to complete a task, or forget to enter something into the system simply because it wasn’t available when needed.
If your risk management team complains about their inability to control their schedules or access necessary data from elsewhere, consider changing how you manage risk. A new system may be safely but instantly accessible from any smart device.
9. Employees are unable to collaborate
As organizations become increasingly digital and global, there’s an expectation for employees to collaborate with their peers across departments, locations, and countries. This incredible ability to share ideas brings great benefits, but only if it’s enabled through effective tools.
It’s difficult to collaborate on a project without proper communication or the ability to see and respond to the work of others in real-time. Outdated systems may result in multiple versions of the same document, each with slightly different information. Team members may have to wait for necessary data or accidentally duplicate each others’ efforts. There’s also no way to know if a document is current or if there’s a newer version stored on someone else’s computer.
An example of collaboration in the risk world would be a new implementation strategy: risk management team members from multiple locations work together to produce an action plan and communicate on results. This process is greatly hindered without the right work-sharing tools.
If you expect your employees to work together from a distance but aren’t giving them the system they need, rethink how you manage risk. There are a huge number of tools, many of them free, that improve performance in this area.
10. You have too many files
Are your employees overloaded with file folders or Excel spreadsheets? If you have a high claims or incident frequency, it’s easy to see how employees can get overwhelmed with the volume of files.
Completing work on paper is bad for the environment, of course, but it is also inefficient. In 2011, a study found that employees spent 2-2.5 hours per week trying to find necessary documents. Even after finding the right document, employees have to look through multiple pages for one piece of information. They can be similarly taxed if they have to open a number of unorganized digital documents to find what they need.
You must also consider the amount of time spent printing a digital claim form, filling it in, and scanning it back into the system — a practice still common in many organizations.
This problem relates to the inability to work remotely: if necessary data is only available in a physical file or locked in the internal drive, it is of little use to employees who happen to be outside the building.
It’s time to change how you manage risk if your organization and employees are swamped with files. It may be worth investing in a centralized, accessible database.
Some of these changes are significant and difficult to implement. Your risk management team will have to learn the ins and outs of a new system, and may be concerned that the changes mean their jobs are at risk. It’s up to you to reassure them that the system will actually make their job more meaningful. Once you change how you manage risk, the benefits you’ve been striving for will suddenly become much more achievable.
ClearRisk's Claims, Incident, and Risk Management System brings all the benefits described above and more. Our online data submission web portal eliminates manual entry and ensures integrity. Our risk management software is built on the largest and more secure platform in the world. You can access historical and real-time data from any smart device. For more information,