By Aclaimant

Dec 20, 2022

It’s been another hectic year for risk managers, including the return of insurance cost increases, chronic talent shortages causing endless frustrations, an unstable wind-down of the pandemic, new financial pressures and social and political polarization. It’s clear that 2023 will present no shortage of problems for the overwhelmed risk manager.  

What can we do about this volatile and seemingly unmanageable environment? We present a few takeaways to help the risk team prepare.

The Inconvenient Insurance Cycle

There was once a time when the insurance cycle – a recurring sequence of significant increases and reductions in insurance pricing – was an ongoing and even predictable phenomenon. But for the last decade or so, the cycle seemingly went away. In fact, many risk managers, and the CFOs they may report to, haven’t lived through a “hard market.” 

The consequence is that when insurance costs take a sharp upturn, probably at a highly inopportune time, the first instinct may be to find a scapegoat. One can only hope that this upturn doesn’t coincide with a larger financial recession which is certain to impose further cost pressures throughout the organization.

Risk managers need to do more than condition their management chain to anticipate unfavorable insurance market conditions. They need to develop a plan to proactively improve their organization’s risk profile and favorably position themselves in the eyes of underwriters. Daily operators can accomplish this by implementing the right technology, which also creates operational efficiencies that can weather a financial recession. That strategy needs to be developed and implemented before, not after, insurance costs take a sharp upturn. Leadership support for such a plan may not come immediately, but is far more likely to be earned once the larger context is made clear.

Staff Additions Probably Aren’t The Solution

Can the risk manager hire their way out of their many predicaments? The probable answer is no. The relatively scarce talent that does exist is likely to be too expensive, and with hiring constraints are in place at virtually every company, even when talent can be had it may not possess the right mix of skills and experience. Too many organizations that staff up to address bandwidth issues or other short-term challenges soon find themselves with unacceptable embedded costs, or mismatches between their talent set and future needs. Yet we all know that just adding more to the list of things to do isn’t really a solution.

Risk teams have two effective ways out of this predicament. The first is by deploying the right technology platform. With the right technology, risk teams can achieve breakthrough levels of efficiency (thereby freeing up talent to devote more time to true value-adds), realize better financial outcomes (by experiencing fewer claims and demonstrably improving the results on claims that do occur), better position themselves in the insurance marketplace (by demonstrating proactivity, partnership and an improved risk profile), and improve their prospects for job security and advancement. 

The second way is closely related to the first: by empowering their larger organization to be an effective extension of the risk management function. Risk teams have only so much time, so when something new arises or requires more attention it is usually at the expense of something else. Meanwhile it is reasonably obvious that workplace hazards are best addressed and avoided by those on the scene, not by a headquarters person hundreds of miles away.

The best way to deputize the workforce is to make their existing job easier. Again, the right risk management technology is the key to success. With the right tools, the daily business operator can effectively assess workplace hazards, identify and implement corrective actions, ensure accountability in remediation, more efficiently and effectively report incidents, and insightfully pinpoint the top loss drivers and priorities for mitigation.

Social Division Isn’t Going Away

At the same time that a certain portion of the customer and employee base expects companies to take certain positions on social issues and adopt policies and practices consistent with that position, there are others that may deem any such actions inadequate, inappropriate or objectionable. This is a symptom of the increasing polarization of American politics and social norms.

There isn’t much that the risk manager can do about the root causes of this phenomenon. But the risk manager can be an effective leader with respect to identifying likely consequences and developing strategies to mitigate them. Examples include both proactive and reactive social media messaging, ensuring supply chain resilience, contributing to corporate social responsibility programs, timely updates to internal standards and training, supplying the right tools to identify and report incidents, and demonstrating the value of a respectful work environment and of keeping employees safe on the job. Companies that don’t take social standards seriously could face reputational damage that is difficult to bounce back from in the short term, and perceptions will continue to linger in the long-term.

Generic Resilience Is A Must

Nobody can consistently predict what the next risk crisis will be. But we can be reasonably sure there will be a “black swan” of profound impact within the next decade. Just as it’s a mistake to think that there won’t be another crisis, it’s a losing strategy to expect the next crisis to be similar to the last one.

The right course of action is to prepare for a wide swath of potential events. This is more practical than might be expected, because while the specific causes can be numerous and may have no direct precedent, the probable consequences fall into a manageable number of foreseeable categories such as property damage, demand reductions, compromised supply chains, liquidity challenges or talent shortages. By planning responses to these categories of consequences, the risk manager is able to prepare for a spectrum of events that are, when considered individually, so highly unlikely as to be impractical to address yet, when accumulated together, a key determinant of corporate viability and success.

Aclaimant Is The Risk Management Platform for Whatever’s Next

With its powerful suite of exposure identification, incident management and risk analytic tools, Aclaimant is a powerful platform for a broad array of risk management needs. Whether it is empowering the daily operator to easily identify hazards, saving countless hours in the course of incident reporting and management, securing better financial outcomes on accidents that do occur, or providing risk teams alongside leadership an efficient and intuitive tool to pinpoint risk drivers and guide mitigation, Aclaimant is the key to better risk management. 


Schedule a demo to see why leading risk managers, insurers, TPAs and brokers are turning to Aclaimant as the backbone of their best-in-class risk management programs.