Insurers Wary Of Emerging Risk Scenario

The risk perspective of insurance companies is changing, and these companies have to be agile in order to be able to ward off threats that digitization has brought in:

Risk management is now on top of the agenda for Indian insurers as risk profile is in a state of constant change. Risk management practices are being thoroughly professionalized and these are now integrated into the process of management of business. In the rapidly changing world of VUCA, or Volatility, Uncertainty, Complexity and Ambiguity, insurance companies face newer and sophisticated forms of risks. The omnipresence of VUCA and the growing complexity thereof in the business environment present roadblocks to an enterprise’s journey towards achieving their objectives. The manifestation of VUCA can be seen in many forms like natural calamities, technological glitches and changes in financial markets.

INFORMATION, CYBER RISK

In today’s digital era where technology has become a game-changer, technology risk is one of the biggest risks faced by insurance companies. Customer data and cybersecurity have emerged as crucial and customer data privacy is one the biggest threat in the digital era. The rise in cyber crimes has added more worries for the insurers.

A risk manager faces threats (risk) while integrating various web platforms, payment gateways and payment merchants with the core internal IT system and applications. As the required data is collected from various digital platforms, at times there are challenges on account of incomplete data and inconsistency thereof. In order to mitigate the technology risk, data cleaning operations, historical trends analysis on various exposures and loss ratio analysis are carried out by applying statistical tools like the regression model and by using a probabilistic approach.