Risk management professionals show an “alarming” lack of understanding and preparation to assess risks from disruptive technologies, including telematics, sensors, the Internet of Things (IoT), smart buildings, and robotics, said insurance broker Marsh in a joint report with the Risk Management Society (RIMS).
60% of respondants surveyed said they don’t conduct risk assessments around disruptive technologies, a strong indication of an understanding gap that risk professionals are advised to grasp hold of as an opportunity to improve and drive their organisation towards a more stable and competitive future.
These figures may come as a surprise to an industry where competing to remain on the cutting-edge of the innovation race has been a focal point for top leaders across finance, insurance and reinsurance industries.
The report found that nearly one-quarter of risk professionals surveyed said their firm didn’t currently use or plan to use the 13 most common disruptive technologies, Marsh said this comes despite previous reports showing that over 90% of firms were using or evaluating IoT technology or wearable technologies.
“Today’s disruptive technologies will soon be — and in many cases already are — the norm for doing business,” said Brian Elowe, Marsh’s US client executive leader and co-author of the report. “Such lack of understanding and attention being paid to the risks is alarming. Organizations cannot fully realize the rewards of using today’s innovative technology if the risks are not fully understood and managed.”
For risk professionals this apparent lack of clarity brings an opportunity to become a more integral part of their organisation, Marsh said “previous Excellence studies have shown, C-suite executives and boards of directors want to know what risks loom ahead for their organizations and are increasingly relying on risk professionals to provide that insight.”
Carol Fox, vp, strategic initiatives for RIMS and co-author of the report, commented; “As organizations adapt to innovative technologies, risk professionals have the opportunity to lead the way in developing risk management capabilities and bringing insights to bear on business strategy decisions.”
“As a first step, risk professionals are advised to proactively educate themselves about disruptive technologies, including what is already in use at their organizations, what technologies may be on the horizon, and the respective risks and rewards of using such technology.”
Disruptive technology is set to have an increasing impact on organisations’ business strategy, model, and risk profile, it’s been one of the hottest topics for the industry, as it undergoes one of its most transformative periods in the re/insurance sector.
The dynamics of innovation and competition at play for re/insurers was debated in-depth in the 2017 Davos WEF, and recently Technology Vision released an insightful glimpse into the emerging technology trends most likely to disrupt the industry this year.