The imperative role of risk analytics in different industries

What if organizations could leverage the power of advanced analytics to predict problems and better prepare their teams? With risk analytics, organizations can understand key threats and determine the best course of action when faced with issues. Let’s look at how specific industries can improve their risk management using this data.

What is risk analytics?

Risk analytics is a set of techniques and methods that accurately measure, quantify, and predict risk for vulnerable industries. While risk management isn’t a new concept, it looks vastly different than years past, primarily due to the introduction of risk analytics. And, because of an ever-changing risk landscape, increased protection is necessary from breaches and lax processes to data hacks and poor systems—especially since regulatory and economic standards are stricter. This makes predictive analytics more vital than ever.

Many industries face numerous cybersecurity and informational risks, making predictability and proactive care essential. Risk analytics provide solutions to manage risks that uniquely impact an organization’s stability and long-term success. While it’s not always anxiety-reducing to think through the worst-case scenarios for a business, teams can have more peace of mind when facing potential problems by being aware of what hackers and online criminals are capable of.

To become risk intelligent, businesses must take a unified approach to management. What does this look like? Executives must make informed decisions about their risk strategy and teams must work together to incorporate protective measures into the many tasks they accomplish. With the help of analytics and benchmarking solutions, organizations can better understand their risks, and business leaders can make informed, data-backed decisions.

Benefits of risk analytics

Cyber risk is the number one problem business leaders face, with 40% of companies stating they’ve seen an uptick in breaches and attacks, per PwC. And that’s just one issue companies face.

 Your business can use risk analytics to help fend against cyberattacks and other troubles and to:

Easily identify problems

Emerging risks are often hard to pinpoint, forcing teams to make guesses about what problems they may face. Unsurprisingly, this makes creating risk management strategies difficult. With risk analytics, leaders and employees can collect and present data to better understand their vulnerabilities and identify gaps. Risk analytics pulls insights, calculates likely scenarios, and accurately predicts future events so teams are genuinely prepared.

Understand complex risks

An organization’s risk exposure is influenced by its data structure and digital footprint, such as websites, social media, blogs, and databases. Companies can leverage risk analytics to streamline this information into one central view with clear takeaways. This makes these insights more accessible and digestible for teams, helping aggregate company-wide information that everyone can use.

Get to the root cause

Implementing quick fixes and solving small portions of risks will only get companies so far. Businesses continuously experience the same problems without learning the specific cause of risks. Risk analytics enables teams to get to the bottom of issues and proactively fix situations at their source.

What industries need risk analytics?

While risk mitigation and analysis are vital in any sector, here are a few industries that can especially benefit from methods designed to predict and plan for emerging risks:

Banking, financial services, and insurance

The financial services industry depends on system integration modeling, the quality of data, and its sourcing, making risk analytics a powerful part of a successful financial institution. With financial risk analytics, banks, credit unions, and insurance companies can better protect their clients’ information and assets from unauthorized access.

Public entities

Big data and predictive analytics enable teams to maintain business continuity and composure when problems occur. Public entities, like local and state governments or colleges and universities, use data analytics solutions to protect sensitive information. These analytics can also predict and plan for extreme weather, attacks on governments, policy control, border security management, and more.

Health care

Data analytics helps health care providers deliver the highest quality care without fear of threats or interruption. With risk analytics in place, medical organizations, health clinics, and even senior living communities can better protect patient data and ensure patient safety.

How to implement risk analytics in your organization

While every organization faces different challenges, leveraging risk analytics can look similar across industries. Here’s how your business can effectively implement the risk analysis process:

Identify risks

The first step is to find and assess internal and external risk factors. This could involve different team members from various departments working together to brainstorm and understand problems. A SWOT analysis—strengths, weaknesses, opportunities, and threats—can help individuals determine major issues, listing them specifically and including necessary details.

Acknowledge uncertainty

Unfortunately, many of the riskiest aspects of any business are unknown and misunderstood. Companies can consider all problems by identifying uncertainty and implementing quantitative analysis of each risk.

Predict the impact

Every problem will have a large or small impact on an organization, and it’s vital to recognize the intensity of a potential risk exposure. Teams can calculate this by looking at the probability of an event occurring and the potential cost of that event to the company. By going through this step, teams can prioritize the most impactful risks to be dealt with first. It can be helpful to rank and list all problems so everyone’s on the same page and knows what’s at stake.

Build analytic models

Once a team determines the greatest risks threatening their organization, they should be inserted into an analysis tool. This model considers all the information to develop distinct probabilities, outcomes, and financial projections. Teams can also make advanced models that run simulations or scenarios to determine how certain problems and solutions play out.

Analyze outcomes and implement solutions

Based on the analysis models’ conclusions, business leaders can review the results, weigh them against likelihood and financial impact, and take the most appropriate action.

The implementation process depends on the assessments done in each of the previous stages. This will only need to be done for high-risk situations—the problems prioritized as most impactful. Any minor threats may not require implementing a plan.

Regularly monitor

For consistent success, companies must designate a specific team of people to regularly check on the risk mitigation strategy to ensure it’s working effectively. This could be done monthly, quarterly, or yearly, if consistent. If the action plan isn’t proactively handling situations, the team should reassess and rerun the risk through the model to determine the best next steps.

Find a trusted partner in Marsh McLennan Agency

No matter what style of risk analytics your organization may benefit from, trained professionals can help you navigate the world of risk management more effectively.

We’re dedicated to reducing your risk exposure through collaboration and data-backed decision-making. Our specialists will work with your team to uncover root-cause behaviors and strengthen your risk control measures for improved efficiency and protection, no matter what threats you face.

We offer:

• Analytics to support your decisions
• Deep carrier relationships to leverage resources
• Experienced risk services client team
• Integration of employee health and safety as part of client culture
• Proactive approaches to risk management
• Strong collaboration and partnership

Reach out to a risk management specialist to get started.