According to a recent study, the National Association of Insurance Commissioners (NAIC), core risks in the insurance business include “underwriting, credit, market, operational, liquidity risks, etc.” Given this wide variety of concerns, there is a tremendous opportunity for risk management in insurance companies to make a positive impact.
To return to the customer service example above, let’s look at how enterprise risk management could help. Risk management involves identifying, assessing, and mitigating risk. The beauty of a well-implemented risk management program is it’s built on a foundation of standardized risk assessments to help companies prioritize their risk based on its potential impact. Naturally, this process will surface risks that will impact the business’s core competencies.
For an insurance company, customer service would inevitably come to the forefront of a risk assessment. To address this risk, the insurance company could take steps to integrate incident management and risk management. Most companies have a way to track incidents like customer complaints, but many do not have a way of categorizing, prioritizing, and escalating incidents across teams. Risk management in the insurance business helps centralize and identify trends in the customer feedback. From there, insurance companies can implement controls to address those trends, such as hiring more customer service reps to resolve long wait times or implementing call-screenings to identify less-than-helpful interactions.
Improving customer service is only one example of how insurance companies can leverage risk management. A fully integrated enterprise risk management program can help insurance companies develop proactive mitigation activities to protect the core of their business.