Information technology has evolved and can unify an organization under one enterprise risk management umbrella.
By TOM STARNER is a freelance writer who specializes in writing and reporting on technology
As director of risk management at Terex, a global heavy manufacturing company in Westport, Conn., that employs a large skilled workforce, Dave Wingo knows all about data silos. He's seen how they can put a real kink in the pursuit of an effective risk management strategy.
But Wingo is happy to report, today's risk management information systems technology delivers a multifaceted front to spread risk management effectively across the enterprise.The time for data silos, at least at Terex and other progressive organizations, has passed. In short, it's goodbye silos and data fragmentation, hello single data sources, easier-to-use interfaces and less costly technology. The result? Lower claims costs, improved safety, better risk assessment and more proactive risk management in general.
"If you go cross-functional with today's newer risk management systems platforms, potentially the value is huge, and the synergy incredible," Wingo said bluntly.
Apart from the company's domestic operations, Terex operates in countries such as China and Malaysia, Germany and the United Kingdom. A few years ago, the company, which manufactures heavy equipment used in the construction, infrastructure, mining, transportation, refining and energy industries, needed a more "holistic" way to deploy its risk management strategy. Terex chose to pursue the much heralded, seldom deployed enterprise risk approach. To get there, of course, required a fresh look at a risk management platform.
Since that decision, the benefits the company has seen in various departments and automation, its effects on safety and how it's helped make the financial case for risk management have been obvious, he said.
Wingo launched a major push for data consolidation and a single risk portal that encompassed all of the various activities his department handles. He also pushed relentlessly with senior management to adopt a risk management system to meet global data consolidation requirements and risk portal needs in a multifunctional way across departments.
"We needed a risk management system that was global and customizable to a variety of functional requirements, and delivered synergy across departments," he said. "If the system were used only by the risk management department, senior management would see it as just another cost."
Instead, he said, the way for risk managers to justify the financial value of a risk management information system is by having one that is multifunctional. By redesigning the risk management process to be more encompassing, and using today's risk management system platforms delivered via the Software as a Service (SaaS) model, allows functions and departments to work together.
Terex is not alone, of course, in using the more flexible risk management technology to make the concept of enterprise risk management a reality. With more focus on self-service and paperless solutions, system solutions are changing the risk management value proposition.
"Until recently, risk management was a discipline, a department, but now it can go well beyond those working in risk management," said Phillip Lucas, director of global product management for Aon eSolutions. "Risk management is now being incorporated into the entire organization. Risk management systems can push out information, so it is flowing in both directions.
"Enterprise risk is finally getting traction, and tools such as smartphones and tablets becoming data flow extensions of risk management systems," he said. "With those tools in the mix, some can report a situation immediately, no lag time. On the flip side, you can have information sent to you instantaneously."
Terex, which uses Aon eSolutions RiskConsole, is able to use the risk management system to coordinate departments--currently risk management, safety and real estate--that may be gathering similar data for their reporting functions.
Terex also is starting to see benefits in other departments as implementation continues. The risk management system risk portal consolidates all relevant information, from the placing of insurance to contractor viewing certificates to all product liability and product risk issues, for example the ability to track data related to a crane collapse and resulting lawsuit. RiskConsole also has allowed Terex to conduct virtual training in native languages in countries around the world.
"You can go and see all the claims, risk issues, safety angles," Wingo said. "You get a cohesive understanding of those aspects of risk management. This type of risk management system improves communications and brings synergy to the process, so we can make appropriate decisions."
Michael Bechara, managing director of Granite Consulting Group Inc., a risk management consultancy based in New York, said new risk management system platforms and other related applications also deliver the ability to analyze data and see relationships that simply could not be identified using older manual methods.
"Smart risk managers know that negative events are rarely caused by one risk and that identifying risk patterns is a key function of their job," said Bechara, whose company offers risk assessment software called Enlighten, which uses artificial intelligence to identify risk patterns based on company objectives.
The software is delivered over the Internet as a service and allows risk managers to align their objectives with their risks to identify dangerous risk patterns.
"Identifying risk patterns requires identifying complex relationships in the risk data being examined and technology is huge help in this area," Bechara said.
To Bechara, risk management system-based tools must identify and assess risk needs with the ability to connect risks to one another, not look at each risk in isolation.
"The only way you can hope to identify risk patterns is with advanced technology. For example, a company with just 10 risks has over 3.6 million possible risk patterns," he said.
Bechara said looking at risks from an ivory tower and not sharing the results in a meaningful way with the people that face the risks every day is self- defeating.
"Any information sharing technology must communicate not only risks but also the business objectives that they threaten. Only then will the information become relevant and actionable for business managers," he said.
Jackie Hair, executive director of risk management at Ingram Micro Inc., a Santa Ana, Calif., technology supplier, has a unified vision for the company's risk management strategy.
To realize that vision, the company chose Riskonnect RMIS from Ga.-based Riskonnect, a provider of enterprise technology for the risk management industry.
Ingram Micro, which has 35,000 employees and operations in 37 countries, primarily is a warehouse logistics distribution provider, so timely access to data is critical for the company's bottom line. Until now, that concept had eluded its risk management strategy.
"We want to see all the data input managed consistently so we can collect it, trend it, and use it to make our business more efficient risk management-wise," she said. "It sounds simple, but it's not. At least not the way we had been managing data."
For Hair, another key aspect of using a new risk management system is to have the workflow piece automated and paperless, so if a loss occurs carriers are notified immediately.
Another facet is the ability to run reports easily for senior management who need to have a bird's eye look at how the risk management effort is working.
"We could not afford to buy an expensive system, but we had to find a way to leverage one system, to break down the silos," she said. "Today's risk management system options can give you both."
When a system is easy to use, said Bob Morrell, CEO of Riskonnect, the data begins flowing freely and the right people can be notified immediately with automated workflow. As a result, senior management has access to timely reports.
"It's incredibly exciting to help Jackie and other leading risk professionals make such a leap forward," Morrell said. Riskonnect is expanding its claims management automation to about 100 individuals globally working for Ingram Micro.
"All of this is done seamlessly in the local language and currency," Morrell said.
Bruce Zaret, a partner who heads the financial services industry practice at Weaver, a large accounting firm based in Dallas, said today there are more players in the risk management systems market and most of those vendors want to help take information out of silos and put it in single data repositories such as data warehouses.
"We are getting beyond the early adopter phase," said Zaret, whose practice includes the insurance industry. "With the other technologies people see, including companies like Google and Amazon, along with mobile computing, it all helps push people further into the technologies that can bring information together.
"Risk is about information and you can't monitor something you don't know about," he said. "The technology is coming down in price, providing risk management with more information to monitor and develop true key performance indicators."
Patrick O'Neill, who manages client servicing in the Americas for CS Stars LLC, the Chicago-based business unit of Marsh that offers STARS Enterprise as its risk management system application, said risk management system technology today can serve as a major enabler for risk managers.
"They can use risk management system platforms to help them figure out exactly what they need to be looking for," he said. "They can spend less time getting more critical information out of the system, and can easily set up parameters on the system and use a dashboard or an alert. The system is doing that legwork."
For example, a risk management system can aggregate exposure from the entire enterprise via a quick survey, and respondents don't even have to know how to use the system. They just answer the questions via email or Web link and the system will track down and make sense of that information.
"The technology behind the scenes is more complex, but for the end user it's much more simple," O'Neill said. "It's very exciting. People in risk management are much more tech savvy than ever before. In addition, it's no longer necessary to spend a lot of time with training and support."
Terex's Wingo is one of those tech-savvy risk managers whose has seen first-hand how today's Web-based system platforms can make the difference. Two years ago, Terex needed to make some real estate location decisions based on employer liability claim potential in the United Kingdom. Wingo said, while the decision has proven to be the right one, it was purely done on "gut instinct."
"I wish we had this system in place then," he said. "It would have allowed us to figure it out more quickly and accurately based on actual data. This time it was a good decision, but moving forward in determining our global footprint, the risk management information system will play a critical role in how we proceed."
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