Analyze This

By Bob Violino  |  Posted 2009-03-02 Print this article Print

Business intelligence and analytics, enterprise risk management and virtualization are critical technologies for success in today’s insurance market.

Enterprise risk management

Another technology, enterprise risk management (ERM), is critical for many insurers, including Nationwide Mutual Insurance Co. The Columbus, Ohio, provider of life, property and casualty insurance uses the OpRisk Management software suite from SAS, which runs on IBM WebSphere Web and application servers.

“Nationwide is in the risk management business, and a lot of good operational risk management was being done before ERM came along,” says Allan Dudek, senior consultant of enterprise risk management. “But a standard way of collecting, measuring, analyzing and reporting didn’t really exist.”

The firm uses the SAS tools to help integrate risk management processes across risk types and risk management programs, as well as throughout the risk management cycle. One component, SAS OpRisk Management, focuses primarily on operational risk, but Nationwide also uses it to support market/credit, strategic and product risk as well, particularly for qualitative assessments, key risk indicators, and issue and action plan tracking.

Because the company uses the platform across risk management programs, it has eliminated the duplication of systems. For example, the Information Risk Management, ERM and Office of Privacy (Legal) functions were all looking for automated systems at the same time.

“By purchasing and implementing one solution, we were able to control costs and provide a great opportunity for increased standardization and information sharing across programs,” Dudek says. Nationwide plans to roll out the platform to additional risk management programs this year, he adds.

Dealing with complexity was a major challenge of implementing ERM. “SAS, like most enterprise software solutions, is a powerful and complex collection of components,” Dudek explains. “It is also highly configurable and customizable. Initially, learning how to put all the pieces together to best meet our needs was a challenge.”

The firm developed expert knowledge in-house rather than depend on outside consultants for the implementation. This slowed early progress, Dudek says, but has paid off in the long run as Nationwide continues to refine its ERM capabilities.

Coordinating resources from various functional areas also proved challenging. The company is trying to establish a support model that more effectively takes into account the close partnerships needed to best leverage ERM. To that end, it created a special Operational Risk Alignment Committee to help coordinate and steer the various groups toward commonly understood and sanctioned goals.


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