By Patrick O’Neill, Founder and President, Redhand Advisors
Risk management and the technology that supports it have traditionally been seen as both lacking innovation and difficult to quantify when it comes to ROI.
Times have changed. Organizations now recognize the importance of effectively managing risk and are investing in the necessary technology to do so.
In fact, as many as 50% of risk professionals say they are witness to better business decisions based on insights gleaned from the current prioritization of risk mitigation efforts and detection of new risks cutting-edge technology has enabled. Fewer risk professionals, however, say the tech they’re engaging with is driving “efficiency” outcomes, like lower compliance or personnel costs. There’s still more that can be done.
As more businesses make risk a priority and with the emergence of new modern systems and integration strategies, coupled with advancements in Generative AI across the risk and insurance space, including integration into risk management information system (RMIS), RiskTech is poised to make a remarkable transformation that will both improve risk management and foster faster innovation.
Here are the five key risk technology trends to watch in 2024:
1. Generative artificial intelligence (AI) goes mainstream.
Although Gen AI — or the ability to “generate” new content based on the vast data the model has been trained on — has been around for many years, it burst into the mainstream in 2023. In fact, global insurers are currently investing almost half of their resources into data, analytics, and AI. The question is: Is it more hype than reality?
RiskTech vendors are rushing to incorporate Gen AI models into their software to take advantage of these powerful capabilities. Gen AI can revolutionize the way we work and do business, improving efficiencies by eliminating routine tasks. I expect that organizations will be more focused and strategic on how they use Gen AI and predict most enterprise level RiskTech vendors will embed Gen AI into their products in 2024.
2. Organizations will focus on automation and operational efficiencies.
As organizations embrace new technologies as the core of their digital transformation, the focus will shift to improving automation and operational efficiencies with the new tools.
Automation and process optimization are two closely related concepts that can significantly impact the success of a business. While automation focuses on eliminating repetitive and mundane tasks using technology, process optimization seeks to improve the efficiency and effectiveness of existing workflows.
Both concepts will continue to dominate the landscape, as every facet of risk management has become too complex and data intensive to track manually. The continued development of technology tools to support automation also reflects on the industry’s commitment to change and improvement.
RiskTech solutions offer many tools to support the efforts to automate routine tasks, including:
- robotic process automation
- business process and workflow management
- data analytics
- business intelligence tools
As technology continues to evolve and new tools and techniques emerge, the future of automation and process optimization looks promising. Businesses that embrace these practices and invest in the necessary tools and training will be well-positioned to succeed in the ever-changing risk landscape. Organizations that don’t are at risk for being left behind with inefficient and ineffective risk management processes and strategies.
3. Integration of AI machine learning (ML) into enterprise solutions.
More RMIS vendors will integrate broader AI and ML capabilities into their risk technology offerings in the coming year. One of the primary purposes for a RMIS is to collect data and provide actionable insights. Integrating AI and ML into these systems will significantly improve organizations’ data analysis capabilities, leading to more informed decision-making. For example, ML algorithms can help businesses identify trends, anomalies, and potential opportunities in their risk profile, enabling them to manage risk more effectively.
In 2024, AI-powered analytics, data visualization, and analysis tools will replace start to static dashboards and reporting, allowing organizations to take the next steps more quickly.
Case in point: Currently, one vendor is working on integrating a Gen AI prototype into its RMIS to make safety audits more efficient. Users simply input their safety audit results into the system, and it will automatically generate recommendations.
4. Interoperability is on the rise.
Interoperability refers to the ability of disparate systems, software, or devices to work together and exchange information in a seamless and effective manner, ensuring that diverse systems and products can connect, communicate, and share data with one another. This is crucial to creating integrated and efficient solutions, allowing users to leverage the strengths of various technologies without facing compatibility issues.
Interoperability can be achieved through many different strategies including traditional data standards, data mapping, and transformation as well as newer strategies such as application program interfaces, middleware, intermediaries, and data exchanges. More and more providers in the risk ecosystem are offering the ability to connect through these various strategies to help organizations break down silos and obtain a more holistic view of risk.
Interoperability offers several benefits including increased efficiencies, costs savings, a seamless user experience, improved data accuracy, improved collaboration, and faster decision making. Overall, interoperability plays a crucial role in creating a connected and efficient ecosystem.
5. Demand and need are driving RiskTech innovation.
The ability to analyze a client’s risk more efficiently is a great motivator for creating new technologies to meet the client’s needs and the demand for not only reducing risk but saving the client’s bottom line as well.
RiskTech vendors are innovating at a faster pace, creating opportunities and solutions quicker than can be produced.
Because of technologies such as AI, analytics, ML, data visualization, and analysis tools, people are creating solutions to solve problems in the market that historically haven’t been solved before. As these technologies mature, real solutions will enter the marketplace in 2024 that didn’t exist a year ago.
Demand and need for these types of services will continue to drive innovation in the RiskTech space. Why? Because businesses require them! Risk Managers are being asked for more data than ever before from their underwriters and other partners. Tools such as AI can help to collect this data that was never readily available.
RiskTech will lead change and innovation in 2024
Last year the data tsunami flooded the industry. This year it’s time to embrace and harness that data with the new and emerging technologies continually being developed by RiskTech vendors. Change and innovation are well underway to transform the capabilities of RiskTech systems to meet the ever-changing needs of organizations.
In the ever-evolving landscape of RiskTech, 2024 holds great promise for change and innovation. RiskTech vendors are not only prepared to meet the evolving needs of organizations but also to revolutionize the capabilities of these systems, pushing the boundaries of what they can deliver.
Schedule an inquiry call with Redhand Advisors to learn more about what’s next with data and the technologies that can take your RMIS to the next level.