Back in 2008 when MBE started looking at how Solvency II might change the way insurers deal with data, we could immediately see challenges in terms of the level of detail required, how the deadlines for delivering reports would be shorter than before and the difficulties in having to 'look-through' to the underlying assets in investment portfolios.
Data, the lifeblood of insurers, would have to flow faster and in greater volume if insurers were to cope in the new environment. But the issue goes deeper than just compliance with a new set of regulations.
The delivery of higher quality and more timely information is becoming an imperative for insurers as they come under pressure from tougher competition and rapid shifts in the wider economy.
CEOs, CFOs and Chief Risk Officers require confidence in their systems to deliver what they need. But strategic decision-making, risk management, reporting and many other essential functions are only successful if the information fed into them is correct and arrives at the right time. Achieving this relies on having data systems that are fit for purpose, in terms of both quality and speed.
Some insurers have a straightforward desire to know their capital requirement but legislation demands much more sophistication in risk management than that. As well as the bare numbers, insurers need to show rigorous and continuous processes for dealing with their risks.
Generating the appropriate risk metrics and reports month after month in a reliable and cost-effective fashion requires a level of data organisation and automation that few businesses have in place.
We developed our software, TRANSKAP, to address these issues. We started out by looking at the process of delivering risk data from end to end.
Our experience over the past seven years has shown us very clearly that the problems are not solved by looking at single data sources, especially not the complexities inherited in something like the asset lookthrough. The key to delivering reliable information throughout the business is the ability to collect data across many different sources and then standardise and consolidate it. When the same information comes in from separate sources, valuable improvements in data quality can be achieved by crosschecking the facts and figures.
TRANSKAP features a central data repository that integrates with both existing internal data systems and third-party providers. Working with data vendors, it is also able to provide up-to-date information on asset holdings without compromising the intellectual property of asset managers.
Needless to say, the system incorporates tools necessary to perform all the asset modelling that is required in the Solvency II standard formula, and it can be customised for internal models.
The other big element is how MBE and TRANSKAP can help streamline and automate processes. By eliminating manual transformations of data, the system improves the speed and reliability of data delivery, so reducing operational risk. It also liberates the staff that were performing the transformations so they can be redeployed into more value-adding analysis roles.
Improving the lineage of the data breeds confidence in its use, particularly when it comes to modelling processes, and that enables better risk identification and risk management.
The final step is reporting and presenting risk information. TRANSKAP has tools and dashboards that deliver valuable risk information straight to the desk of senior risk managers. All risk information can also easily be transform in ways that can be used in reports and presentation to the board and other stakeholders.
We realise that different companies have different needs, so the system is designed to be flexible and customisable.
TRANSKAP gives insurers the opportunity to springboard beyond a system that solves the basic regulatory requirement - towards one that provides a platform for proper, efficient risk management.
MBE is a consultancy led by Christo Müller, Andries Beukes and Vibeke Edvardsen. They bring together decades of experience in technology, actuarial and process development - the three core skills needed to implement risk management solutions for insurers. E-mail: [email protected]
Channels:Software - IT
Companies:MBE
