Its said that death and taxes are the only two things we can count on in this life. The information technology industry, however, seems determined to add a third item to the list: that a new tech buzz phrase will burst on the scene every few years. At present, this term is big data.
Big data is hardly a new concept, but timing is everything. With the collision of social media and web content with enterprise information, the term has been redefined. I suspect that 2013 will be the year big data breaks out. Much the way cloud computing broke through in 2010 and 2011, big data has become perhaps the Big Tech Topic not only in the business and IT press, but also in the general media.
Ive been reading and thinking a lot recently about big data and what it means for risk managers, the insurance programs they manage and the role risk managers will play in the dawning era of big data.
Mercifully, were still in the early days of the big data evolution. Its not too early, however, for risk managers to start thinking about when and how theyll board the big data train.
Lets start with a definition of big data. I like Gartners one-sentence definition:
Big data in general is defined as high-volume, high-velocity, and/or high-variety information assets that require new forms of cost-effective, innovative information processing to enable enhanced decision making, insight discovery, and process optimization.
The Gartner definition focusesrightly, I thinkon the opportunities inherent in big data; however, according to the McKinsey Global Institute, big data will demand that businesses pay attention to it:
Leaders in every sector will have to grapple with the implications of big data, not just a few data-oriented managers. The increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in data for the foreseeable future.
McKinseys 156-page report, entitled Big data: The next frontier for innovation, competition, and productivity, is one of the most comprehensive and well-regarded reports on the topic. Even doing what I call the risk managers skim (a skill unique to risk managers, who spend hours reviewing and checking policies), it is an excellent resource for anyone wanting to get up to speed on big data and how it is transforming virtually every sector of the world economy.
I should note that the McKinsey study says little directly about the impact of big data on organizational risk management and insurance programs. My frequent discussions with risk manager clients and prospects have, however, helped me to better understand their particular concerns. When these parties ask my opinion on how to get up to speed on big data, I boil the conversation down to three elements:
This blog post is my first stab at collecting my thoughts and sharing them in a way that will, I hope, make big data approachableeven interestingto risk managers.
The next time I return to this topic, Id like to consider the crucial role data analytics plays in this story; after all, drawing moreand more relevantinsights from a big data strategy should be one of the key goals of a big data strategy.
Your comments and thoughts on this matter are appreciated!