Transformation

Rethinking Risk: Elements for Implementing an Agile Risk and Compliance Function

By 
Neville Reeves
February 2022

The risk function has long been a critical part of the insurance industry, but in the wake of the multiyear COVID-19 pandemic, it is now more important than ever. Insurers must rethink and reinvent their approach to risk, and the risk function must play a more strategic role in supporting growth and change. This involves adapting to new compliance requirements and developing a more nimble and responsive approach to risk management with the goal of creating a more resilient organization.

Rethinking risk functions in this way is critical because the rapid pace of regulatory change makes it difficult for compliance teams to have an impact on anything other than their legacy processes. To address the complexities of regulatory change in this increasingly digital world, risk functions must evolve to be proactive rather than reactive, agile rather than static, and strategic instead of tactical. 

Risk and compliance teams must become strategic partners for change. This means that the function becomes a critical enabler of growth initiatives, helping companies to identify risks while being sensitive to business opportunities. This includes envisioning how new products can be launched, services could be improved, and technologies could be implemented. Risk and compliance teams should also be proactive enablers of organizational transformation. In other words, it needs to help insurers adapt as the environment around them changes, which might incorporate how they manage their business or deal with external stakeholders. As companies think about change, risk and compliance should be an integral part of the discussion from the outset.

Consider these useful design elements when creating an agile risk and compliance function:

First, it is important to have a centralized hub where all data and activity can be accessed and monitored. This allows for better oversight and faster response time to potential issues. Additionally, it's important to have clearly defined roles and responsibilities within the risk and compliance team, as well as good communication protocols, so that everyone is aware of what's happening at all times.

Another key element is to make use of technology advances. Not only does technology provide the strategic vision that underpins risk and compliance initiatives, it also provides a means of implementing that vision across an organization. By harnessing the power of analytics and automation, risk and compliance teams can more effectively monitor activities and identify potential issues. This allows for more efficient operations and frees up staff to focus on higher-value tasks such as surfacing insights that can be used for innovation initiatives. Simply put, the winners in this space will be those with advanced analytics capabilities that are accessible to everyone throughout the enterprise — from business units to risk and compliance teams.

Most importantly, organizations will need to adopt new ways of working and tools to make this transformation as smooth as possible. Many of the changes will require agreement and collaboration between various parts of an organization; some may even demand breaking down long-standing barriers between functions. However, those that take on the challenge will be well positioned to capitalize on opportunities and respond to challenges in a more agile and effective way.

By implementing the key elements outlined above, organizations can: 

• Reduce cost by leveraging automation and advanced analytics for faster and more complete information

• Improve the effectiveness of compliance programs by minimizing opaqueness, increasing transparency, and decreasing time to prioritize

• Unleash the power of every team member and department

• Better understand external factors affecting business operations through a more comprehensive view of risk management

The Takeaway

Risks are inherent in doing business. At TheoremOne, we foster collaborative teams that enable better communication and awareness while developing the flexibility to respond to change. This approach builds businesses that are adaptive and therefore better positioned to deal with risk. 

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The risk function has long been a critical part of the insurance industry, but in the wake of the multiyear COVID-19 pandemic, it is now more important than ever. Insurers must rethink and reinvent their approach to risk, and the risk function must play a more strategic role in supporting growth and change. This involves adapting to new compliance requirements and developing a more nimble and responsive approach to risk management with the goal of creating a more resilient organization.

Rethinking risk functions in this way is critical because the rapid pace of regulatory change makes it difficult for compliance teams to have an impact on anything other than their legacy processes. To address the complexities of regulatory change in this increasingly digital world, risk functions must evolve to be proactive rather than reactive, agile rather than static, and strategic instead of tactical. 

Risk and compliance teams must become strategic partners for change. This means that the function becomes a critical enabler of growth initiatives, helping companies to identify risks while being sensitive to business opportunities. This includes envisioning how new products can be launched, services could be improved, and technologies could be implemented. Risk and compliance teams should also be proactive enablers of organizational transformation. In other words, it needs to help insurers adapt as the environment around them changes, which might incorporate how they manage their business or deal with external stakeholders. As companies think about change, risk and compliance should be an integral part of the discussion from the outset.

Consider these useful design elements when creating an agile risk and compliance function:

First, it is important to have a centralized hub where all data and activity can be accessed and monitored. This allows for better oversight and faster response time to potential issues. Additionally, it's important to have clearly defined roles and responsibilities within the risk and compliance team, as well as good communication protocols, so that everyone is aware of what's happening at all times.

Another key element is to make use of technology advances. Not only does technology provide the strategic vision that underpins risk and compliance initiatives, it also provides a means of implementing that vision across an organization. By harnessing the power of analytics and automation, risk and compliance teams can more effectively monitor activities and identify potential issues. This allows for more efficient operations and frees up staff to focus on higher-value tasks such as surfacing insights that can be used for innovation initiatives. Simply put, the winners in this space will be those with advanced analytics capabilities that are accessible to everyone throughout the enterprise — from business units to risk and compliance teams.

Most importantly, organizations will need to adopt new ways of working and tools to make this transformation as smooth as possible. Many of the changes will require agreement and collaboration between various parts of an organization; some may even demand breaking down long-standing barriers between functions. However, those that take on the challenge will be well positioned to capitalize on opportunities and respond to challenges in a more agile and effective way.

By implementing the key elements outlined above, organizations can: 

• Reduce cost by leveraging automation and advanced analytics for faster and more complete information

• Improve the effectiveness of compliance programs by minimizing opaqueness, increasing transparency, and decreasing time to prioritize

• Unleash the power of every team member and department

• Better understand external factors affecting business operations through a more comprehensive view of risk management

The Takeaway

Risks are inherent in doing business. At TheoremOne, we foster collaborative teams that enable better communication and awareness while developing the flexibility to respond to change. This approach builds businesses that are adaptive and therefore better positioned to deal with risk. 

Sources

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To learn more, contact our team at 1-888-969-2983 or hello@theoremone.co.

Enter your information below to receive an exclusive guide on TheoremOne's strategies to help insurance companies transform and implement agile risk and compliance teams.

To learn more, contact our team at 1-888-969-2983 or hello@theoremone.co.

Enter your information below to receive an exclusive guide on TheoremOne's strategies to help insurance companies transform and implement agile risk and compliance teams.

To learn more, contact our team at 1-888-969-2983 or hello@theoremone.co.

Enter your information below to receive an exclusive guide on TheoremOne's strategies to help insurance companies transform and implement agile risk and compliance teams.

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To learn more, contact our team at 1-888-969-2983 or hello@theoremone.co.

Neville Reeves

Partner, Transformation and Innovation

Neville is a Partner at TheoremOne focused on organizational transformation and innovation across our roster of Fortune 1000 clients. He guides teams at all levels to generate a sustainable pace of change that promotes internal advocacy for continuous improvement and ultimately lasting innovation.

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Partner, Transformation and Innovation

Neville is a Partner at TheoremOne focused on organizational transformation and innovation across our roster of Fortune 1000 clients. He guides teams at all levels to generate a sustainable pace of change that promotes internal advocacy for continuous improvement and ultimately lasting innovation.

Business Development Manager

Marc is a Business Development Manager who works with corporate innovators and executors to create and optimize their digital technology strategies to stay ahead. He has worked in operations and technology and focuses on helping clients pinpoint opportunities to transform their businesses using automation and other advanced technology.

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