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A Comprehensive Approach to Risk Mitigation and Loss Control
September 10, 2019 Media, PA
Tech Insight
For the August issue of Captive Review, AETI Chief Operations Officer Stephen Malloy was interviewed by Ross Law on managing risk across multiple facets. Mr. Malloy discussed Quadra, AETI’s exposure asset management solution, and how its features support company-wide efforts in controlling losses. Quadra’s capabilities in exposure asset management, insurance cost allocation, and organization of risk management standards were highlighted, with a focus on the importance of examining both claims and exposure asset data to get a complete picture of a company’s level of risk.
A forthcoming training module designed to help communicate risk management standards to employees, with different types of training available for different professional levels, was also discussed. This module is intended to help companies improve compliance with standards by enabling employees to access content related to specific exposures or to obtain certifications.
In conclusion, risk management is not a responsibility handled by just one person or department – it is a set of practices that every employee can and should utilize to control losses. The following is an excerpt of the interview:
Captive Review (CR): What differentiates Quadra® from other solutions in the alternative risk market?
Steve Malloy (SM): Many of our competitors, as far as RMIS systems go, are largely based on aggregating claim data and claims management. While some systems do have a means of managing and storing exposure information, they don't do it well; it's not standardized, concise or easy to use.
Quadra aggregates claims data but it's not a claims management system. Our purpose and the differentiating factor, is that Quadra looks at and manages insurance exposure information and also allocates insurance costs in the same way a standard insurance carrier would.
CR: Does that mean less providers will need to be brought in as Quadra also covers these areas?
SM: If you're within the alternative risk market, you're essentially your own insurance company. You still need to do an analysis on what your exposure is. It’s all about managing risk, and the first step in managing risk is to know what it is. Those who look at their exposures and have a firm comprehension of what they are, are going to develop a better understanding of what the levels of risk truly are. And this is how any insurance carrier would function.
A standard insurance company would capture information like payroll, class codes for employees for workers' compensation, or for building losses, they would capture construction type and what occupancy is in the building. ISO has standardized such things within the insurance industry. Quadra captures that information like any insurance company would. Therefore, RMIS systems are really more like claims management and claims analysis systems. However, that's really only half the picture. Here, only the loss information is being looked at. It’s important also to compare this to what the overall risk is.
CR: What are some of the key challenges facing your clients right now?
SM: We like to say that we not only have good vision, but we also have good hearing. Quadra comes to fruition through listening to our customers and what issues they face in an ever more costly and changing risk environment. Therefore, our largest initiative for this year is to provide a risk management tool to help control losses.
The program does this in several ways: first, we've teamed up with a risk management partner that gains insight and expertise on forward-looking ways to manage losses. It’s also worth noting that this ethos has to come from the top down; Risk management is the responsibility of the entire organization. We have to provide a means of accomplishing the goal of having every person within the organization embrace the fact that risk management is their responsibility, too.
How software can be leveraged to aid in this paradigm shift is, first, that organizations can create risk management standards. Those standards can be put into Quadra in the risk management module and then can be easily searched by users based on any key word. Using Quadra's surveys, users can create audits against their standards.
The second thing we've done is partner with a content provider for training. Training can occur at three levels: the executive level, for understanding and managing errors and omissions/sexual harassment/directors’ and officers’ exposures. Then there’s the managerial level for human resource compliance, and then there's the employee level and this can include the likes of certifications for those working with children.
CR: Are there risk areas some clients aren't, and should, be paying more attention to?
SM: Importantly, most clients are now recognizing that risk management is not best handled by having a single person whose title is 'risk manager' and who sits in the home office and issues memos. Cybersecurity would be the number one risk that organizations need to bring to the forefront and we're seeing inquiries in this area now on a daily basis. Next would be to have a standards that provide easy access and guidelines for every individual within the organization to understand.
Quadra is a means of searching standards that users create. And the reason why is because an individual’s loss history/exposure basis is their own. Every organization is unique. A firm's risk management standards must fundamentally be born from their loss history and everyone’s resources are limited. Recognizing you have limited resources and so putting those resources where the risk has the greatest harm to the insurance program, is a huge benefit in mitigating losses.
CR: You mentioned the limits of having a single risk manager in place. What do you view as your role as supporting that risk manager or changing clients' practices?
SM: Quadra is not only software. We also do data analysis and we provide guidance in strategies against managing risk and managing total cost of risk. AETI's role is to provide that guidance and data analysis, and Quadra's role is to provide a platform which captures all of their exposure information in a standardized way and then a risk management platform that provides the training resources, reference material, for employees, managers and executives, and also a means of auditing against your standards to ensure the organization is compliant with your own standards.
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