Today, data is the new gold. While data is perceived to be a source of vital intelligence that can help organisations make informed risk management decisions and predict risks to their asset portfolios, understanding how to identify and apply data continues to be an area where many businesses struggle.
As they say, data is data, but we know that not all data is the same, nor is it viewed through the same lens or taken at the same value. While some companies are challenged by a lack of quality data, others grapple with the issue of data overload given the availability of waves of endless data from various sources including brokers, insurers, and partners. Data quickly becomes complex.
In a recent Pan-Asia Risk and Insurance Management Association (PARIMA) survey, 67% of respondents acknowledged that data is an important tool to help them make sense of the cost of risk. The challenge now is to work out how to effectively apply that data. Companies sitting on data insights are aware they are sitting on gold, but they also struggle to determine the veracity, accuracy and relevance of the data sets.
The answer is to have in place a data strategy with a good governance structure that enables your organisation to establish and agree on what is, for your organisation, the single version of truth. This is the foundation for building data resilience.
For example, FM Global’s data analytics database contains some 60,000 data points, carefully compiled over the years by its engineering force. This store of crucial data has enhanced our ability to identify locations or equipment that are predisposed to loss and enables us to better advise clients so they can sharpen their focus to better mitigate the risks to their businesses.
Establishing a single version of truth is not easy. We strongly recommend partnering with experts such as brokers, carriers or third-party data experts who are familiar with managing and analysing data to help you make sense of the information and help solve the problem.
That will help you avoid the ‘garbage in-garbage out’ phenomenon where the quality of the data you receive will be equivalent to the quality of the data you input. Working with experts will help ensure that you are paying attention to, and investing in, the relevant and accurate information that will deliver value. Another important strategy is to ensure data owners are responsible for preserving the integrity of the data they gather, which is essentially a governance process. When we input any data, we need a validation process that is clear and transparent. This helps maintain data integrity.
A final challenge lies in communicating the benefits of your data to end-users to build trust. While we spend a lot of time collecting and analysing large amounts of data, we also need to be able to articulate the purpose of what we are trying to achieve so that there is awareness of our goal and an understanding of the reason for the approach. For FM Global, the key is to demonstrate how our data contributes to resilience, based on our own experience and methods, and backed by robust data.
FM Global’s database has been years in the making, comprising hard data obtained from real businesses confronting and mitigating real world risks. The result is a database of physical truths, informing our analysis and enhancing our ability to deliver value.
This commentary is based on remarks delivered at a "Resilience Week" virtual event on 26 October 2021, hosted by the Pan-Asia Risk and Insurance Management Association (PARIMA).