Insurance Enterprise Risk Management: The Digital Generation

Part I of a nine-part series that will establish a vision and roadmap for a digital generation of enterprise risk management (ERM) and Insurance.

Editor’s Note: This is Part I of a multi-part series that will establish a vision and roadmap for a digital generation of enterprise risk management (ERM) and Insurance.

There is a dangerous, fast-growing gap between emerging risk management requirements and the siloed legacy risk management and insurance solutions currently available to address them. This gap is created by a rapid increase in the number and complexity of enterprise risks. These risks are being driven by global mega-trends and emerging technologies; trends and technologies that are fundamentally restructuring our world, economies and industries; and how we live and work today. The series will cover eight areas critical to closing the gap:

  • In the next article in this series we will address what we are calling the ERM Danger Zone and provide an overview of the emerging concerns and risks, their complexity and the impact they will have left unaddressed. The top concerns for today’s enterprises are; reputational risk, cyber attacks, armed conflict, political and regulatory change, artificial intelligence, blockchain/distributed ledger, big data, mobile devices, the Internet of Things (IoT), globalization, the digital transformation of the industries, new business models, abrupt changes to operations, products, and supply chains. These concerns are combining to create an environment of hyper-change and thus hyper-risk. We will review specific events such as the Wells Fargo debacle and the impact (financial, reputation, etc.), Chipotle, and recent and devastating malware/ransomware attacks.
  • Flying Blind: The growing gap between emerging requirements and existing capabilities. While the “Danger Zone” article lays out the landscape for today’s enterprise risk, here we delve into the growing chasm between the current legacy, and even modern systems, and their mismatch in trying to deal with current and impending issues and concerns.
  • Not Fit for Purpose: Legacy ERM and insurance solutions and mindsets were never designed to help organizations address the challenges now emerging. We examine why they are incapable of making the transition to the digital world we are entering, and why they will remain stuck at the digital gates. This article will compare and contrast old business models and architectures with the new emerging ones based on, for example, SaaS and data driven and microservices based architectures, smart contracts and new technologies.
  • Enabling Technologies: The emerging technologies and why they and the innovation mindset that created them are enabling a new generation of digitally born solutions designed to create value in a digital world. From artificial intelligence to distributed ledgers to smart contracts, these new technologies and more are combining to start to completely disrupt enterprise risk as we know it. This article will review in depth these technologies and specific use cases in the areas of next generation commercial insurance and enterprise risk.
  • The Digital Generation: A vision for digital generation of solutions that dramatically improve ease of use, the spread of risk culture and the ability of organizations to understand, predict, prevent and mitigate risk throughout the enterprise and its extended value chain. New customer demands for greater transparency, frictionless transactions, and more innovative solutions are allowing disruptive competitors to quickly enter the market and create a leadership advantage. Here we will review these trends and discuss how enterprise risk can begin to bridge to solutions to solve these issues.
  • The Case For Collaborative Innovation: This article discusses platform-enabled digital ecosystems and how they enable products and companies that collaborate within them to bring far more powerful solutions to market faster. It also examines why working collaboratively across the industry to establish this next generation is critical, and why continuing to support products developed in siloes is a recipe for failure. New technologies and business models are still evolving and need to have the support of developing standards and common platforms. Silicon Valley has been famous for creating an environment of “co-opetition.” SVIA has established an open innovation lab and membership program to facilitate this kind of innovation and will play a central role establishing the dialog, connections, and resources needed accelerate this work. We believe that coopetition is not just a requirement, but a strategy necessary for survival. Some examples of potential benefits: Through a strategic combination of yours and your competition’s solutions you can win in a new segment of the market which neither of you could enter alone. Also by working together, you can minimize costs, create common standards, and achieve economies of scale, while not jeopardizing your unique attributes. This and more will be examined in this article.
  • Innovation and Interoperability Framework: This article presents an overview of an innovation and interoperability framework and why it is critical to accelerating the innovation and collaboration that will be required to build a new generation of solutions fast enough. At SVIA we believe that by developing a cloud / SaaS based solution of an interoperable innovation framework we can enable a digital generation of ERM / Commercial Insurance solutions. These solutions will be able to accelerate and dramatically increase the ability to identify, predict, prevent, mitigate, and recover from risks to the business, people, processes, assets, and customers of the enterprise. SVIA further believes there is enough pent up need and enough ROI justification to warrant collaborative funding and development of the infrastructure and key applications to support this. We will be actively working to bring together companies interested in supporting this.
  • The final article in the series will examine “Why it’s critical for the industry to empower customers to participate in the innovation process,” and what are the benefits of “customer-centric” innovation; why it’s critical for customers to take an active role in the development of products and solutions; and what are the new avenues being creating for them to do that and what are the specific benefits participating companies and customers will gain through the approach.

With the multiplicity of trends, technologies, and issues, the current approach to commercial insurance and enterprise risk management is incapable of addressing the emerging risk  environment we are facing today and the growing complexity we face tomorrow and beyond. We believe it is important to start to address the above issues, but it requires rethinking, working together and looking for innovative ways moving forward to how we build business models, solutions and products.

We recommend this series for anyone committed to making sure that a new, fit for purpose generation of risk and insurance solutions is available to enterprises before the gap between current and legacy systems makes them highly non-competitive.

Lewis Farrell // Lewis Farrell is Innovation Analyst & Evangelist @ Silicon Valley Insurance Accelerator. Lewis is an accomplished, hands-on, senior strategic marketing executive whose role is to help SVIA develop insights into emerging technologies that will enable its members to create new solutions that address today and tomorrow’s risks for enterprise customers.

Leave a Comment