The Advent of Risk Management websites
March 2000
Sharing information elevates the visibility
of the risk management function, and increases understanding and cooperation.
Having the ability to communicate risk management efforts and present results
promptly and concisely is very powerful. Risk management information systems
can provide the tool.
by Anita Schoenfeld
Tillinghast-Towers Perrin
In today's world, technology has become such an integral part of our lives
that even grandmothers use e-mail to talk with their grandchildren. Surely if
grandmothers have figured out how the Internet can get their message across,
risk management professionals should see the same value in this technology.
The Internet (or your company's internal Intranet) can also be used to "get
your message across" in a format that is informative, usable, interactive, and
less intrusive than pounds of paper.
Typically, a currently available risk management information system (RMIS)
is "Internet ready." These systems include the capability to "publish" risk
management information on secure websites, distribute information by e-mail,
or even allow direct access to the application using a desktop browser.
How Can a Risk Management website Work for You?
Consider the impact of a corporate website (or a web page on an existing
corporate site) dedicated solely to risk management issues. Secure sites could
contain information on losses or severity and frequency trends, by type or cause
of loss. Benchmark information (typically normalized to minimize "competition"
between the users) could be provided to corporate subsidiaries or divisions,
with the goal of providing tools to measure performance. websites could also
include risk management "tips of the month," disaster plans, training information,
corporate telephone books, and emergency numbers.
More advanced websites might include the corporate cost allocation formula
with interactive models, and the ability to generate standard or ad hoc reports.
Monthly loss information could be downloaded into these models or printed in
reports to raise awareness about the impact of losses. Providing users the tools
to generate their own analytical reports would support proactive loss management
and loss prevention efforts (as well as allowing management to see the impact
of losses on possible remuneration).
The majority of existing websites are designed to facilitate prompt incident
or loss reporting. Electronic incident and loss report forms are provided on
the website. Supervisors can simply open the website, complete the form, and
submit it via e-mail directly to insurers or third-party administrators, or
directly into a database maintained in the risk management department where
the report is reviewed further before disposition. If the RMIS is attached to
the website, incident reports could be entered directly into the application,
providing real-time access to new loss reports and incident information.
Security on these websites could be maintained. websites on internal Intranets
would be the most secure and could be protected by an existing Intranet firewall
and, if necessary, by additional password protection. Internet-based websites
would be less secure, although by using technology (such as digital certificates,
passwords, and other tools), privacy could be protected.
How Does a New RMIS Support the website?
The most current versions of risk management information systems in the marketplace
have the capacity to support risk management websites. Minimally, they can
facilitate communication (and eliminate paper) by publishing monthly reports
through e-mail or by using integrated web browsers, which support the use of
an Intranet or Internet-based website. A web-based RMIS can provide information
and loss management tools throughout the entire organization.
A fully integrated RMIS/website could provide direct access into the RMIS
from the website. The ability to view, record, or alter information in the
RMIS could be controlled by security and passwords within the RMIS. Employees
could request standardized or ad hoc reports independently from the risk management
staff, supporting the concept of responsibility for performance.
A fully functional web-based RMIS could support the risk management function
in highly decentralized organizational structures, where typically the responsibility
for profitability or financial results rests with the management of the subsidiary
or division. Managing risk in this type of organizational structure can be difficult
because the risk manager is usually too far removed from day-to-day operations
at the subsidiary or division to know when loss trends begin to develop. The
risk manager may be the last to know when the frequency of a certain type of
loss begins to increase, particularly when location management's interest may
be served by delaying loss reports or independently "managing" the loss by self-funding
costs.
A web-based RMIS facilitates prompt reporting; there is no obstacle to providing
an immediate report of a loss because of an absence or missed telephone call.
Anyone with a desktop browser can complete a loss report. The website can also
track when losses are reported, providing a platform to reward prompt reporting
and penalize delays.
However, along with easy access to the RMIS to report new incidents and losses
comes easy access to claim details at the field level. Some risk managers may
not want to share information on specific claim reserves or settlement strategies,
due to concern over having to continually explain the position taken by the
risk management department or insurer. The frequency of confrontation is typically
directly proportional to the amount of impact loss frequency and costs have
on individual managers' bonuses. There is also the issue of protecting the privacy
of injured employees' medical information, and containing distribution of information
on claims of organizational or institutional importance.
The level of access directly into the RMIS needs to be designed with consideration
of these issues, and can be controlled through security access defined by the
RMIS access. However, if responsibility for controlling losses is placed on
the subsidiary or divisional level, then access to information needed to affect
the outcomes must be provided. The website could provide the platform to educate
and provide the tools needed to gain consensus on managing losses.
Those of us who have been part of the risk management community for a long
time know that sharing information elevates the visibility of the risk management
function, and increases understanding and cooperation. Having the ability to
communicate risk management efforts and present results promptly and concisely
is very powerful.
Technology is the pathway. We only need to walk down the path.
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