Successful organizations have been using risk management to limit their risk exposure for decades—centuries even. In the fourth century B.C.E., ancient Egyptians set up trade caravans to reduce their risk of theft and enable traders to combine resources as they traversed hundreds of miles with their goods.
Nowadays, you can achieve the same level of success using far fewer resources when you take advantage of digital risk management software tools. Here’s a dive into what risk management tools are and some of the most effective use cases so you can start planning your own risk mitigation system.
What Are Risk Management Tools?
Risk management tools refer to software that organizations use to identify, manage, and assess their risks. In many instances, in real-time.
Using the insights from risk management software, you can make more effective decisions about how to mitigate and reduce risk, as well as how and when to transfer it to insurers.
What Can You Use Risk Management Tools to Do?
These tools use risk, situational, business climate, and organizational data to give you insights. As such, the number of use cases for risk management software is essentially unlimited. However, here are some of the most common applications.
Managing Claims
You can use risk management software tools to reduce the costs associated with reporting and resolving claims.
For example, with your tool, you get a centralized system for storing and analyzing claim information. Suppose a retail company was looking for ways to reduce its net cost of claims. With their risk management software, they could quickly pull up historical claims data and see:
- Which claims came with the heaviest costs
- How often expensive claims occurred
- The stores or regions that tended to have the most costly claims
Armed with this data, the company could adjust its insurance coverage for certain stores or regions. Decision-makers could also discover patterns that could indicate internal processing issues that may be pushing claims costs higher.
Establishing an Incident Management System
For many organizations, the most challenging facet of managing incidents is predicting which ones are the most likely to occur. But your risk management software can make foreseeing incidents far easier.
To illustrate, suppose a commercial construction company has seen its workers' compensation premiums rise steadily—and apparently out of control—over the past several years. To reign in these costs, risk managers can simply pull up the incident histories associated with different kinds of projects, subcontractors, and situational factors like weather, climate issues, seasonal events, and natural disasters.
Analyzing the context of incidents would quickly reveal trends regarding which incidents are most likely and the conditions that cause them. Risk strategists can then employ:
- Training programs that teach workers how to boost personal and workplace safety
- Equipment management systems that keep equipment functioning safely, reducing the number of incidents that result in workers comp claims
- Incident response systems that ensure those with injuries get immediate medical attention, which can save them weeks or months of recovery time.
- Incident management systems that protect other workers from hurting themselves in connection with unsafe conditions
Managing the Cost of Risk
When is it best to retain the costs of claims, and when is it wiser to transfer this cost to an insurer? How does the cost of paying people to manage your claims impact your total cost of risk (TCoR)? The answers to these and other questions surface organically when you analyze your data using risk management software. In this way, you also foster a data-driven decision culture.
For instance, you work for a manufacturer and need to decide between maintaining the minimum required coverage and managing many claims in-house or paying higher premiums for more robust coverage from an insurer. Risk management software can make these kinds of decisions relatively straightforward.
For instance, your historical data can reveal the kinds of incidents you’re most likely to encounter and how much each will cost. The software can also make it easier to compare what different insurers charge for similar coverage, making it easier to identify the best deals and assess your premium costs.
Also, you can identify trends regarding the kinds of incidents and their associated costs. You can then use this data to estimate the future price tag of retaining your costs instead of opting for more coverage.
Managing Your Assets and Exposure
Rather than relying on spreadsheets and manual risk data entry, you can use risk management software to gain a comprehensive view of your assets and the risks inherent to each.
This is particularly helpful for distributed organizations with business units in multiple locations. You can give your managers access to a unified, centralized risk management solution. They can then enter asset and risk data, providing you with a comprehensive, deep view of all of your assets. With this data, you’re in a better position to choose the best coverage option as well as negotiate for lower premiums.
With Ventiv IRM, you empower time-tested wisdom with modern, data-based decision-making. Ventiv gives you a deep view of your risks and simplifies the process of reducing your TCoR. Whether you’re managing claims, and assets, or finetuning your incident management plans, Ventiv has a solution that simplifies the process. Chat with an expert to see how Ventiv’s IRM is right for your organization.
