Interoperability is a key theme in current risk management. Dan MacKenzie, Managing Director and Software Product Manager, explains how technology is influencing this
What technology trends are currently shaping the market and what solutions are being developed to meet insurer modelling challenges?
At Conning, we are focusing on two broad categories: cloud-based solutions and workflow automation. With the cloud, there’s practically no instance when it is not mentioned as a topic – everyone already has some element of cloud infrastructure in place and that is set to increase. For insurers, areas such as big data and customer support are really driving cloud adoption.
With workflow, it’s all about governance, interconnectivity and reproducibility. We need to daisy-chain together disparate systems without manual intervention – workflow automation and industrialisation are critical to making that a success.
There are other trends, including Linux adoption, richer dashboard analytics, and new graphics packages that are also helping shape the market. One of the biggest challenges that we see is interoperability between software vendors, particularly in the cloud. I expect to see an alliance among vendors that enables seamless interfacing between different systems and a broader solution set for our collective customers.
How are insurers coping with the ever-present threat of cyber-attacks?
People worry about the security aspect of cloud services, for example, but, in fact, cloud deployments tend to have much more stringent security protocols than a typical in-house implementation. Personally, we haven’t seen any breaches on our platform because we rely on industry-class encryption and double log-on authorisations.
Companies need to demand best practice protocols and perform regular penetration tests to ensure their systems are up to scratch. A lot of the real risk lies in the fact that people are not yet fully comfortable with cloud technologies and other new developments, so they really don’t know what the warning signs are.
What other risks are on your radar and how can technology help?
Model validation is a risk. Our stochastic modelling software works to track the future development of a company or portfolio and mitigates that risk through dynamic responses to emerging events. It helps our clients make decisions with confidence.
Opportunities can be seen in the shape of new technology such as big data, blockchain and AI. What difference will they make?
None of these directly impact Conning’s solution space right now but we expect big data to start playing an important role soon. People need to store ever-expanding data in an accessible way – not just as a siloed repository but as a dynamic part of every decision.
Additional data storage capabilities allow users to establish the assumptions underlying their models. This is particularly important for customers with insurance products, which are becoming more flexible. Typically, insurance products wouldn’t be updated as frequently as investment products, but we are seeing more frequent interactions being driven by big data. That in turn influences product design.
How can risk managers embed risk culture more successfully into business processes?
There is always room for improvement. What I’ve noticed is that IT has moved away from being just a check-box, regulatory exercise. However, processes and culture remain disjointed.
In order to have an enriched risk management culture, technical components have to reach out to and embrace working teams and departments rather than simply provide ad hoc services. This is where workflow automation can play a part in hooking up various systems and processes to become a catalyst for a broader and deeper risk management culture within any company.
Are actuaries still reliant on spreadsheet technologies?
I think we are finally seeing companies either move away from Excel entirely or instead trying to use it in a more industrialised fashion. I don’t think it can ever be totally eliminated, as it remains a comfort zone for many users and people will always turn to it for their own offline analysis.
However, from a corporate production perspective, it is too old, too open and loaded with manual risk. Companies have acknowledged these weaknesses and are moving on to new solutions, tailored more specifically to their requirements.