Standard Data Allows Construction of a Predictive Risk Model

The average financial, risk and claim management executive typically doesn’t have the time or tools to build effective predictive models of expected risk costs. By utilizing low cost (or free) applications, executives gain an almost immediate understanding of the key factors driving their risk costs.

Have your risk management efforts become bogged down in an endless loop of answering tedious questions from brokers, third party adjusters, and operations management? Have you ever considered a risk analysis and modelling effort to understand more precisely where to spend your time and resources? Did you know that resources exist that can take very routine data from your existing underwriting and claims sources, and provide almost immediate feedback to develop a cost-saving risk model?

The key to creating a simple risk profile management system is in the underlying structure and benchmarking of underwriting and claim data, presented in a form that identifies where the actual or expected costs are coming from. Once the risk profile data structure and reporting is constructed and integrated into the existing systems, continuous insights about the nature, causes, and conditions of risk will follow. The more visual a presentation of key data, the easier it is over time to make changes to the risk profiles and improve the outcomes.

Third party administrators typically export basic data as daily, weekly, or monthly jobs for their clients. This effort will assist the first step in a modelling environment to optimize outcomes and improve value in the solutions. Ideally, real-time data streams should be created to perform higher level analytics and to create opportunities for data-driven business decision making.

Significant value can be created with real-time, data-driven approaches. For instance, predictive models can be built into reporting functions to instantaneously trigger solutions that are critical to cut costs. As an example, if the expected outcomes are known a short time after a claim occurrence, then appropriate resources can be delivered to effectively put the claim on a course for closure.

An example of a low cost risk profiling application is our Total Cost of Risk Estimator. The first step is to enter all of your aggregate data, then the power of our analytics and data can be put to work for you immediately with a free risk profile cost report. Thereafter, we can work with you to determine the best, low cost solution to drive value in your operations.

By Robert J. Blackburn, Managing Principal, Blackburn Group, Inc., contact him at This email address is being protected from spambots. You need JavaScript enabled to view it..