5 Tips for Successful Digital Transformation

New digital technologies are transforming the way business is done across the enterprise.
The potential benefits of a successful digital transformation are compelling. What business would pass up the chance of delivering a better service for customers, improving efficiency and cutting costs? However, realising that potential requires careful consideration and planning.
While 92 percent of IT decision-makers surveyed for Fujitsu’s “Walking the Digital Tightrope” report classed their organisations as “somewhat” or “extremely mature” with regards to digital maturity, 70 percent felt that digital projects were a gamble and 65 percent admitted their digital projects were not aligned.
For any insurance organisation working up a digital strategy, there are clearly challenges to overcome, but they’re not insurmountable.

1: Gather Feedback, Discuss and Plan
One of the main reasons digital transformation strategies fail is because they aren’t properly planned out. The pressure to compete, or the fear of falling behind, can lead to bad decisions.
Almost half of insurers don’t think they have a realistic plan for digital transition, and 60 percent report that they’re missing key elements like clear vision, compliance and risk processes, according to Bain & Co.’s “Global Digital Insurance Benchmarking Report 2015.”
To avoid this problem, you need to get all the key stakeholders involved in the planning process. You need to look at internal and external feedback to identify key areas to target for improvement. It’s vital to choose new technologies for the right reasons.
Get all the cards on the table, discuss the merits of different strategies, and make sure that everyone agrees on the right path forward. Once you have a plan, lay out a clear roadmap for delivery. Set up metrics that allow you to measure the progress and impact of your new processes and tools.

2: Put the Customer First
A customer-centric approach is the key to securing loyalty and attracting new business. Consider how expectations have changed. Customers want easy access to their products 24/7, and they expect personalized service.
Provide an accessible web portal and convenient apps. If customers want to update their contents inventory at 11 p.m. or upload a photo of some damage from their phone, enable them to do that.
You can also harvest the data you collect for useful insights that allow you to develop new, innovative products and better serve your customers. It’s not about sweeping away the old.
The digital technologies you choose should support and complement your current services, building on your existing foundations. Always keep the customer in mind and ask—what will this new technology deliver for them?

3: Equip Claims Pros with the Right Tools
You can free up claims adjusters from laborious, time-consuming tasks and make life more convenient for your customers by employing the right tools. A cloud-based claims management system enables mobility and provides an efficient and clear workflow.
With the right data and intelligence working behind the scenes, possibly fraudulent claims are automatically flagged for investigation. Self-service portals allow customers to capture inventories and check on claim progress at a time that suits them, and they cut the workload for adjusters.

4: Keep Security Tight
The risk of a data breach for any company is severe. The average consolidated total cost of a breach is $3.8 million, according to Ponemon Institute research. But for an insurance carrier, the reputational damage is incalculable. Customer concerns about privacy must be treated seriously. Security has to be baked into any digital transformation plan.
Hire a qualified CISO and consider engaging some security experts to test your system, help you find the weak spots and plug them. Ensure that data is always encrypted. Protect all data at rest and in transit with the latest encryption technologies.
This will drastically lower the odds of any malicious activity exposing any customer data. Security is an on-going concern, not a task that can be ticked off, so make sure you provision for regular checks and updates.

5: Find a Balance
It can be difficult to juggle all of these considerations. You want to deliver tangible improvements for your customers as well as for all of your internal departments. You’ll need to balance and integrate new technologies with legacy systems. You also need to make sure that data is secure without sacrificing convenience for employees and customers.
Finding the right balance will be different for every carrier, and your digital presence will have to evolve and adapt. Drawing up an initial digital strategy is about starting a conversation that will continue for years to come—that’s why measuring your progress is so important. You need to know what’s working and what isn’t, so that you can change direction when you need to.
The beauty of digital transformation done right is that it’s mutually beneficial for your business and for your customers.

-Robert Chase

N1billion. That is, according to the Arewa Consultative Forum’s former president, how much rice Nigeria imports every day.

Addressing shareholders of Jamaiyar Matan Arewa during a meeting, Alhaji Aliko Muhamed said spending so much on rice imports was needless given Nigeria’s assets. Comparing to China, he said: “China has a population of around 1.3 billion people but they don’t import food. They are able to feed themselves while Nigeria which has a population lower can’t feed its people without imports.”

He then called on government at all levels in the country to take necessary measures to reverse the trend. Muhammed also asked Nigerian women to urge their husbands to turn to agricultural activities.

This speech comes as Nigeria’s economy presently experiences some turmoil resulting from fall in price of oil. The situation which has driven authorities to turn to other sources of revenue places agriculture as a valid alternative to oil and gas.

– Aaron Akinocho

The U.S. Federal Reserve will hold an open meeting today on proposals, in the works for more than five years, for capital requirements and other rules for insurance companies.

The central bank’s announcement last Friday came a week after Fed Governor Daniel Tarullo previewed the proposals in a speech to insurance commissioners.

Requirements for the amount of capital regulators say a company must have on hand to ward off excessive borrowing or insolvency will apply to a large swath of the insurance industry. The Fed will also release proposed rules for the few insurance companies deemed “too big to fail” that are intended to head off risks to U.S. financial stability.

The industry has waited more than five years to see the rules, which are tied to the Dodd-Frank Wall Street reform law passed in 2010 after the financial crisis.

According to Tarullo, the capital level proposals will follow two tracks: one for smaller holding companies that own banks and one for systemically important companies.

For insurance holding companies, the Fed is looking into a “building block approach,” in which it would aggregate the capital across a firm’s different units to calculate a single requirement.

For systemically important companies, the Fed is working on a “consolidated approach” that would categorize assets and liabilities into risk segments, assess each segment and then set a minimum ratio of the consolidated capital requirement to capital resources, Tarullo said.

Dirk Kempthorne, President of the American Council of Life Insurers Trade Group, said it has “questions about an approach that would put in place two distinctly different capital regimes for insurance entities overseen by the Board, and so we will be looking extremely closely at the details of the proposals once they are released.”

Three utilities companies in the Ukraine, the Israel National Electricity Authority and most recently a German nuclear power plant have suffered cyber-attacks in recent months.

As energy, transportation or telecommunication companies, but also the manufacturing sector, become more reliant on automation, robot technologies and digital networks of connected devices, they are also increasingly vulnerable to cyber-attacks.

Rather than stealing data, cyber-attacks against critical infrastructure and manufacturers are more likely to target industrial control systems (ICS) to manipulate or shut-down operations.

The current issue of Global Risk Dialogue, the Allianz Global Corporate & Specialty (AGCS) magazine about corporate risks and insurance, focuses on how increasing cyber risks for utilities, networks and smart factories can be mitigated.

There is growing concern about the vulnerability of ICS,which are used to monitor or control processes in industrial and manufacturing sectors.

For example, there were 295 recorded ICScyber incidents in the USlast year – up 20%[i].Acyber-attack against an ICS could result in physical damage, such as a fire or explosion, as well as business interruption (BI), says Nigel Pearson, Global Head of Fidelity, AGCS. “A number of ICS still used by manufacturing and utilities companies today were designed at a time before cyber security became a priority issue.” In addition, ICS are also vulnerable to both technical failure and operator error which can be much more frequent and severe in terms of impact and are often not captured in cyber reports.

Smart Factory Opportunities and Risks
While ICS are a particular issue for the utilities sector, similar cyber-related physical damage and BI risks exist in manufacturing. So-called smart factories of the Industry 4.0 era heavily rely on automation, robots and connected supply chains. From an insurer’s perspective, this brings new risks as well as opportunities.

“Continuous monitoring and predictive maintenance of automated production lines will reduce small scale frequency losses and increase equipment lifetime,” explains Michael Bruch, Head of Emerging Trends, AGCS.

“Supply chains will bebetter monitored, more predictable and visible with improved tracking options and losses reduced from spoilage or expiration.”

However, interconnectivity of supply chains and production processes will increase cyber vulnerability, especially as security flaws built into embedded software code are difficult to detect.

“Overall loss potential is rising significantly, creating high accumulation potential with larger and more complex claims,” Bruch explains.

Should a robot be hacked or suffer a technical fault, a production line could be interrupted for hours or days, at a potential cost of tens of millions of dollars per day. If an algorithm is wrong or IT systems go down, global supply chains could be severely disrupted and losses could spread across regions and industries. Meanwhile, new technology could raise liability issues.

For example, claims may be leveled against the developers and vendors of predictive maintenance software in cases where injury occurs.

How can increasing cyber risks in the industrial sector be efficiently prevented and mitigated? “While there is no such thing as 100% security, a comprehensive cyber and IT risk governance strategy involving various corporate functions is necessary to successfully combat cyber risks,” says Jens Krickhahn, Cyber Insurance Expert at AGCS Central and Eastern Europe. “High technical IT security standards of networks, software and mobile devices, staff awareness trainings, continuous process optimisation and rigid management of access rights and guidelines must go hand in hand. To manage the residual risks, cyber insurance is becoming a core element of IT risk management for many companies.”

Refining Existing Risk Services
In future, digitalisation will also shift the nature of corporate assets from mostly physical to increasingly intangible. Brand value and reputation, as well as intellectual property, technological know-how and supply chain networks, will become more important assets. Bruch adds:

“Coverage for a company’s factory will increasingly demand cyber, reputational and specific non-physical damage BI covers to adequately protect intangible assets. Refining existing and developing new risk services beyond the traditional is key for both insurers and businesses to prepare jointly for the next industrial revolution.”

To mitigate supply chain risks in the digital era, for example, providing a risk solution is more than just an insurance policy, but rather a bundle of services including risk analysis, benchmarking and mitigation advice that can help analyse quality and resilience.

“We can provide company-specific scoring for suppliers locations and benchmark this for a given industry”, explains Volker Muench, AGCS Global Property Practice Group Leader.

“The more information we have, the better we can model and monitor exposures and be in a position to offer higher limits of insurance coverage.”