In a previous blog post, we discussed the importance of storing data and the value it can bring to any organization. Now, we’re going to talk about the next step in using data: analytics. Analytics turn your data from useful to extremely effective and allow you to make changes that will benefit your organization as a whole. A survey by Deloitte found that 55% of organizations believe that analysis improves the organization's competitive position and 96% agree that it will continue to become more important over the next three years. Risk managers should utilize data analytics as they allow you to:
1. Prevent repetitive losses.
Incidents are the number one predictor of claims. For example, somebody trips on a faulty floor mat in your organization's entrance. They choose not to file a claim, but a few weeks later, somebody else trips, falls, and wants to bring action against you. If you had taken action upon the first occurrence, the claim could have been mitigated. Analytics allow you to identify trends and red flags that could become issues and implement strategies to stop them before they cost you money or someone becomes injured. You can also recognize if a certain area, department, or season has a particularly high claim occurrence and run a root-cause analysis to understand what’s going wrong and how you can fix it in the future. This prevents you from regularly spending money on the same types of claims and will improve the safety and efficiency of the workplace.
2. Improve insurance premiums.
Insurance providers are a business like any other — the end goal is to be profitable. To do this, they want to insure organizations that have “good” risk: those that are likely to pay more in premiums than they require for loss coverage. If you can show an insurance company the data analysis and resulting mitigation strategies your organization uses, they will want insure you and may offer a more competitive rate. Being able to prevent repetitive losses as described above can also lower premiums.
3. Improve reporting.
With more in-depth data and analytics, you will be able to report on any relevant factor in your organization or industry. Analytics help diagnose the issues in your organization and how to fix them. Data will be actionable, easy for anyone to understand, and able to support any business idea or mitigation strategy.
4. Monitor performance.
Regular and consistent analytics will allow you to constantly understand how your organization is doing. Managers will be able to hold units or departments accountable for exceeding or failing to meet goals, recognize red flags that may indicate something needs to be changed, or discover why a business strategy isn’t working out as well as planned. With this in-depth understanding, you’ll enable growth while meeting goals and avoiding overly risky scenarios. An individual department will be more likely to work on issues if they are shown to be underperforming.
5. Forecasting and decision making.
Comprehension of what went wrong historically lets you prepare for potential incidents. Of course, there’s always the chance of completely unexpected events, but a thorough risk plan based on analysis will have you ready for almost anything. Analytics also allow you to understand your growth and performance, which is key for setting goals or budgets.
Without analytics, it’s difficult for risk managers to learn from the past or prepare for the future. They make it simple to improve the efficiency and effectiveness of any business.
If you’re having trouble managing data analytics, our next blog post will be about the steps that are needed for data analysis, so check back next week! You could also take a look at our product page, as ClearRisk’s Risk Management Information System has analytics and reporting as one of its many capabilities.