Compliance and risk management are important for insurers as they manage the risks to their client’s lives, health, and assets. A customer cannot have faith in an organization which cannot manage its own risks. One needs to meet certain frameworks and regulatory mandates especially in the BFSI sector.
Insurance risk management and compliance work hand in hand although the roles and responsibilities associated with each are slightly different. Compliance is about ensuring that a company follows the regulatory and legal standards and procedures and maintains security.
Risk management is a proactive review of and mitigation plan for the organization’s current and potential risks. It involves assessment of the various processes and departments, to check what makes the organization vulnerable. It goes beyond the standard compliance where the rules and regulations. In case of risk management, the risks vary and therefore, the management programs to deal with them vary too.
Here is a checklist which the insurer attend to :
Work with a top-down and bottom-up approach
A top down approach involves shaping the business strategies and plans at the management level. The down up approach is about looking at a detailed process map, actions that individuals working with these processes perform, understanding what can go wrong and instating controls for those risks. While compliance focuses on both these areas, risk management takes a micro-level view.
Working a thorough top down and bottom up approach will ensure that all the chinks are in the right place and there are no potential vulnerabilities
Make your teams work hand-in-hand
The risk management and compliance teams have to work closely. Legal and regulatory risk and compliance are part of risk management framework. Apart from the operational risks, there may be risks even within the internal IT service level agreements (SLAs). However, never make your compliance and risk management initiative solely a technological strategy. In insurance business, you need to have someone to guard your back too. The fine print with SLAs and information management needs someone experienced in insurance and with legal expertise.
Focus on the people
An insurance business is a combination of technology, process, and people. While compliance mandates brush over all three, only the risk management team, along with other department heads, can get into the nitty-gritty of training people to mitigate the vulnerabilities.
Manage tight budgets
Budgets for security are usually low as businesses tend to believe that compliance covers all the areas. It’s important for IT managers to not over-engineer controls that manage risks. The level of control depends on the organization’s risk appetite. IT managers have to understand the risks thoroughly and the subsequent loss to business. One cannot mitigate the risk fully and the business needs to calculate risks. Ensure that the right risk picture is in place.
It’s excellent to have a process to mitigate risks during the sales and renewal of policies.
Stringent SLAs for third party partners
Managing outsourced partners would involve defining the nature of the relationship and the process of working. Create a blueprint of what is accessible to the vendor and the risks it entails—right from the selection to continuous monitoring, to evaluation. The monitoring process may be conducted by an internal team or managed by an audit partner.
You may break the vendor-managed processes and functions among multiple partners. Don’t rely solely on one partner to manage everything. Focus should also be on data destruction policies in case the contract has to be terminated. Ensure that vendors have limited access to the company’s processes and the internal IT should monitor that access.Add to favorites