Risk management and insurance management were traditionally treated as separate entities. However, in the digital era, significant benefits can be derived from their integration for both customers and risk carriers. In this presentation (in german langauge) Benjamin Zühr and Hartmut Mai discuss the integration of risk management and insurance management. They dive into two approaches. One is mgm Cosmo which allows for creation of risk structures for companies, flexible risk allocation, and clustering of risks into objects. The other one is Cyberwrite which offers risk analysis services to stakeholders in the insurance industry, including brokers, underwriters, and reinsurers.
Introducing the Cosmo Risk Module by mgm
The “Cosmo Risk” module is a solution for integrating risk management and insurance management. It allows the creation of risk structures for companies, flexible risk allocation, and clustering of risks into objects. The module is built on the mgm Low-Code-A12-Platform, enabling partners to develop their risk models using Low-Code tools.
The system’s API-based architecture enables seamless integration with other platforms, facilitating the management and transfer of risk information. The interconnected nature of the module ensures efficient data flow between risk and insurance management components.
The modular design of the system allows users to set up custom risk, contract, or claims models. Each module is API-based and can function independently or in conjunction with other modules, providing flexibility and adaptability to different business needs.
Integration: Combining Risk Management and Contract Management
A significant advantage of integration lies in combining risk management with traditional contract management. By connecting risk profiles with insurance contracts, changes in risks can be accounted for, impacting coverage accordingly. This dynamic approach enhances risk management effectiveness.
Managing Uninsurable Risks and Claims
There is a critical aspect of dealing with uninsurable risks and managing claims. While only a fraction of risks (10-15%) may be insurable, a comprehensive system like “Cosmo Claims” helps in understanding and processing claims, leading to a better understanding of risk exposure.
Cyberwrite: Risk Analysis for Cyber Insurance
Cyberwrite offers risk analysis services to stakeholders in the insurance industry, including brokers, underwriters, and reinsurers. Their comprehensive risk reports are based on data collection from targeted companies. It provides detailed insights, allowing stakeholders to examine vulnerabilities like passwords exposed on the dark web, assess their relevance to the company, and identify areas for improvement. The process involves collecting external data based on NIST Cyber Risk Scoring, correlating it with classifiers (risk types), and calculating risk scores for policy components. Ongoing monitoring allows for timely risk alerts and improvements. The platform is API-compatible and multilingual, facilitating seamless integration across insurance networks.
Risk Analysis Process
Cyberwrite’s risk analysis involves gathering external data based on NIST Cyber Risk Scoring, creating thousands of data points that correlate with classifiers (risk types). These data points feed into an AI-based risk model, which calculates risk scores for policy components, helping underwriters weigh risks and benchmark the company against others.
Risk Score Calculation
Using data from the targeted company and benchmarking it against thousands of others in the same risk class and jurisdiction, Cyberwrite calculates a risk score ranging from 0 to 100. A higher score indicates lower risk.
The risk scores are not only calculated for the entire company but also for each coverage component of a potential cyber policy. This allows underwriters to customize insurance contracts and facilitates meaningful discussions between brokers and clients to identify potential investment opportunities for loss mitigation.
Economic Impact Analysis and Mitigation Recommendations
Cyberwrite conducts an economic impact analysis, estimating the potential damages an external attack could inflict on the company. The risk reports provide mitigation recommendations to address identified vulnerabilities, prioritizing actions for risk reduction.
Platform Integration and Global Reach
The platform’s API compatibility enables seamless integration with various insurance stakeholders, making it suitable for large portfolios and multinational operations. The platform already supports nine languages, ensuring its accessibility on a global scale.
Strengthening Risk and Insurance Management: Customer and Insurer Perspectives
Enhancing the connection between risk and insurance management is vital for both customers and insurers, urging future considerations for a more transparent and data-driven approach to risk assessment and decision-making.
Despite only 15% of risks being insurable, customers find value in receiving risk information to make informed decisions about risk avoidance strategies and investments in risk management. The demand for transparency, especially through digitalization, allows machines to handle complex data combinations and calculations, enhancing risk assessment capabilities.
Insurers can benefit by expanding their business models through Loss Engineering, providing additional services alongside traditional insurance offerings. Leveraging their vast data and risk analysis resources, insurers should consider sharing more valuable risk insights with customers to enhance risk management practices.