An article by Mary Long ” Goodbye Spreadsheets, You Had a Good Run ” that I read recently discusses a phenomenon that I have encountered regularly for years when speaking with risk management and insurance executives, that they work for a medium-sized company or a group listed on the stock exchange.
This phenomenon is as follows: even in our era where digitalization and interconnection continue to grow (Cloud, Mobility, Internet of Things), risk, insurance and claims management at the company level is still mainly carried out with Excel. Regardless of what this says about the emphasis on enterprise-level insurance management, one would realistically assume that companies that spend millions on ERP, human resources, and management of customer relations (CRM) also provide a budget for IT in the insurance department.
Indeed, even if risk and insurance management is not typically a key skill, it is – as for all components of the value chain – the optimization of processes and the use of resources. However, simplification of processes and reduction of work can only be achieved through the systematic use of an appropriate IT tool, which is absolutely not the case for Excel.
Back to the future with “Management-by-Excel”
Imagine for yourself: what I call “the ecosystem of risk management and insurance” (i.e. the client’s risk and insurance department, the subsidiaries, external service providers such as brokers and insurers, etc.) relies largely based on a tool developed towards the end of the 1970s by Messrs Bricklin and Frankston. VisiCalc, the name of Excel’s ancestor, was almost 40 years ago the first “Killer-App” for PC (with the required memory of a GIF image file).
My observations are based on a study dating from 2016 in which 70% of Risk & insurance managers say they opt for Excel as their IT tool. What does this tell us? That the majority of insurance and risk managers are content with an IT tool which reached its peak while their parents were probably still at school!
There is no good management without measurement. Or: how to make positive contribution visible
Let’s remember what the main task of a Risk & insurance manager consists of. Well yes, it is the implementation of global risk management which should put the following objectives at the forefront:
- Optimize risk costs.
Insurance management itself plays a big role in risk management because it is indeed an important tool in the control and management of risks, (e.g. transfer of risks via insurance contracts). The creation of an effective risk culture in the company is the basis of this and, as “agents of change”, risk managers must make their contribution to this.
But in fact it is – especially for company managers – about understanding the positive contribution of risk management and insurance to the success of the company, using hard figures and facts. But this transparency and tangibility cannot be achieved using archaic IT tools.
We no longer use rotary phones or watch movies on VHS tapes. So why do risk and insurance managers still trust the Excel data management tool?
Risk and insurance management is too complex for Excel, but not for an RMIS
There is no denying that Excel is well suited for data evaluation and visualization and should continue to have its place among any manager’s tools. But, in an interconnected and complex world in which processes are global and people work in different locations and at different times, Excel is really ill-suited.
In the age of web-based data management solutions, so-called information and risk management systems (RIMS) are the best (and ultimately the cheapest). A centralized warehouse for all risk, insurance and claims data (master data and financial data) across the entire company as well as documents of all kinds. Data can be entered either directly or by online masks, or be exchanged automatically via interfaces with internal systems (accounting, human resources) or external systems (brokers, insurers).
This data and information is available in real time to RMIS users in the form of relevant reports, assessments and dashboards. And this in any part of the world and regardless of their access to the system. Welcome to the digital age!
SIGR as “Single Point of Truth” for better risk and insurance management
Risk and insurance managers who take their work seriously and want to set a good example in their company should no longer consider Excel as the preferred data management and reporting tool. Indeed, Excel does not enable consistent and sustainable risk and insurance management across the entire company.
An essential quality is missing from Excel, namely the possibility of representing a Single Point of Truth (SPOT), therefore a centralized place where data coming from different sources from inside as well as from outside the company converge: incident and claims data, insurance contract data, risks and actions, site risk data, key company figures and exposures, visit reports, audits, scanned documents, etc. Furthermore, a RMIS helps transform all this data into relevant information for decision-making, at the push of a button and without loss of time or risk of error if copying by hand.
So set a good example and opt for a RMIS, the modern, web-based, future-oriented data management solution that will help you achieve your goals today and tomorrow. You can of course continue to use Excel for your reporting (which a RMIS also allows you to do).
