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How to Choose the Right Risk Management System

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Organizations use risk management systems to track claims and risk information, analyze and report on data, and monitor and control the overall cost of risk management. You’ve recognized the need for a risk management system in your organization. Great! But how do you ensure that you choose the right system? There are several vendors to choose from, each slightly different. You also need to choose a system that’s right for your organization: it should be a tool to help you manage risk. It must streamline your process, not add another task.

There are three steps that will allow you to feel confident in the risk management system you choose for your organization. First, consider your internal environment. Then, use this to identify your primary and secondary system criteria. Finally, use this knowledge to research and select the vendor that is best suited to your organization.

Step One - Internal Environment Analysis

Before you begin looking at multiple vendors’ systems and becoming overwhelmed with the available options, take time to consider your internal situation and needs.

1. Consider the big picture

The first step in choosing the right risk management system is considering the big picture. What motivated you to consider purchasing a RMIS? What organizational goals are you trying to accomplish by using one? Determining whether you primarily need to reduce costs, decrease claims, or improve employee productivity can set you on the right path. In addition, consider your long-term goals: in five years, how would you like to see the system scaled to achieve widespread benefits?

2. Consider your current process

Next, dive in deeper and consider your current claims and risk management process. The following are just some examples of questions you could ask yourself:

  • When claims or incidents occur, how is information collected and submitted to the risk management team?
  • How is claim and incident data stored and managed by the risk management team?
  • How many claims does the organization typically see in a year and how does this affect the risk management team?
  • What types of reports are necessary for your risk department and how are they created?
  • Is there an existing risk management system in place?
  • How does the risk management team communicate with other employees or departments?
  • Do multiple employees or departments access the risk management system

3. Consider the pain points of your current process

After an analysis of the current process, consider the common issues within it. For example:

  • Are there bottlenecks where employees are held up due to overly complex processes?
  • Do employees get frustrated with repetitive or redundant work, such as data entry?
  • What parts of the job are more difficult or time-consuming than they need to be?

These areas indicate the processes that are most in need of a risk management system and will tell you where to focus.

4. Consult with users

Next, consult with all users or potential users of the risk management system. Ask them to break down their day-by-day tasks and processes. They may be able to highlight some problem areas that you hadn’t considered. Asking questions about their ideal or desired system can also provide valuable insight on what capabilities the system should have.

You should also consider the team’s experience with software systems and the level of user-friendliness that will be required.

5. Consult with IT and legal teams

It’s important to check in with members of other areas of the organization, such as IT and legal. These teams will illustrate more technical requirements that you may have missed in your original analysis. With the rise in cyber risk, security and privacy are arguably some of the most important issues when choosing a risk management system (See here for our blog on 30 Questions to Ask Vendors to Reduce Cyber Risk). IT can also provide information on data residency requirements, necessary system integrations, and vendor conditions; while legal teams can assist you in understanding necessary project or contract terms.

Step Two - Determine Your Needs

Consolidate all of the above information into two main categories: your organization’s primary criteria (the module that is most important) and your secondary criteria (other key functionalities and factors). Both of these will be helpful when beginning step three: choosing a provider.

1. Identify primary criteria 

These crucial modules are those that solve the big picture issue you described in Step One. It is the primary reason you are choosing to purchase a risk management system. Common overarching solutions include

  • Claims and incident management, to simplify the process that occurs after something goes wrong.
  • Vendor management, to track and monitor all aspects of your supply chain.
  • Insurance certificate management, to oversee and manage various insurance policies.

If you know you absolutely require one of these functions and a particular vendor doesn’t offer it, you can immediately continue your search.

2. Identify secondary criteria

Secondary key factors include other system functionalities or aspects of the vendor itself. These will help you decide which system best suits your needs, particularly if more than one meet your primary criteria. Consider the following:

  • Data intake, import, and export. When an employee witnesses an incident, how should they submit the details? How would you like to get information into and out of the system? What quality of data comes into the risk management team and how should the system aid in maintaining data integrity?
  • Reports. What kind of reports do you regularly use? Do you need the option to create custom reports? Who can view and create reports and how should they be shared with stakeholders?
  • Integration. Does the system need to “speak with” other systems? How should this communication be set up?
  • Automation. What level of automation would best suit your risk team? What tasks need to be streamlined or removed altogether?
  • Accessibility. Should the system be remotely accessible or only available to employees in the workplace? Do you need multiple types of users (for example, view-only vs. admins)?
  • Customization. Do you need a system that can be customized to your organization’s hierarchy, process, or data types?
  • Support. Will your team require a lot of training and ongoing support? What methods will be most effective for system users?
  • Implementation. How soon are you hoping to have the system in place? Is there one particular area you would like to see it used first?
  • Technology. What types of technology does your organization best work with? What security concerns do you have?
  • Pricing. What are the maximum and ideal budgets you can put towards the purchase of a risk management system?

Step Three - Choosing a Provider

1. Research

The first step is performing research. There are several RMS providers on the market, and each varies in terms of functionality, technology, and pricing. Explore each vendor’s information to determine if they provide your primary criteria and match up with your secondary criteria.

2. Demonstrations and references

Select the most promising systems and contact the vendor to receive a demonstration. During these demos, focus on whether the system meets the needs and requirements you determined in the first two steps. Note any strengths and weaknesses of the system, both in comparison to your requirements list and to other systems.

Another important factor at this stage is whether you like the vendor’s team. You’re going to be spending significant amounts of time working with them in the months ahead, so ensure they take the time to understand your organization and its needs. The team should tailor the demonstration to the requirements you’ve listed and identify how their system can best solve your organization’s issues.

Finally, request references from the vendor. It’s incredibly valuable to speak with people who actually use the system in their work. Ensure that references are in a similar industry, location, or of a similar size to you. Possible questions for existing customers could include:

  • How has the software cut costs or inefficiencies?
  • What is the quality and availability of support?
  • How long did it take to implement?
  • How reliable is the system?
  • What are the strengths and weaknesses of the system or team?
  • Does the system meet your needs?
  • Were there any unexpected issues in the process or system?

3. Calculate ROI

After a conversation with the vendor, you should have an idea of how the system will be used in your organization as well as pricing. Use this information to calculate the ROI you expect to receive. Remember: While many risk management systems require significant upfront investment, they can lower claim costs, reduce incident frequency, and allow employees to spend time mitigating risk — all of which makes the cost more than worth it.

By following these steps, you will be able to easily select the risk management system that is best for your organization and your team. While there are many options to choose from, being confident in your choice will make it easier to gain support for the initiative, implement the system, and begin seeing the results you hoped for.

If you're beginning the search for a claims management system, why not start with ClearRisk? Our claims, incident, and risk management system can help you streamline your risk management process, has a high ROI, and comes with an excellent support team. Interested? Learn more now! 

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Topics: risk management system risk management information system choosing a risk management system risk management vendor