Risk Management Benchmarking Approaches and Options Drew Barber, RMIS Consultant DMB Risk Solutions,...
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Risk Management Benchmarking Approaches and Options Drew Barber, RMIS Consultant DMB Risk Solutions, LLC Risk Management Benchmarking 1
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Transcript of Risk Management Benchmarking Approaches and Options Drew Barber, RMIS Consultant DMB Risk Solutions,...
Risk Management Benchmarking 1
Risk Management BenchmarkingApproaches and Options
Drew Barber, RMIS ConsultantDMB Risk Solutions, LLC
Risk Management Benchmarking 2
Risk Management Benchmarking Internal vs External
• Internal - Organization benchmarks performance against internal sister operations/ entitieso Advantages:
o Similar operations provide more accurate comparisono Easier to aggregate and report on datao Effective means of performance managemento Promotes continuous improvement
o Disadvantageso Does not tell how the organization overall performance compared to peer companieso Doesn’t really answer “yeah, but how I am really doing?”
• External – Organization benchmarks performance against external peer organizations/ companieso Advantages:
o Answers “how am I really doing?”o Gets management attention.
o Disadvantageso May be difficult to do (or find benchmarks that are actually useful).o Everyone wants to externally benchmark, but resistant to sharing internal data.
Risk Management Benchmarking 3
Risk Management Benchmarking Types
• Activity Based- Benchmarking against practices and policies. (Leading Indicators)o Advantages:
o Easier to share.o Provides ideas that can be adopted
in other organizations.o Improvements are quickly shown
in risk management rankings
o Disadvantageso Doesn’t really address outcomes/
results.o May not motivate the
organization.o Measurement of activities may be
subjective in nature
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Activity Based Benchmarking Example (Internal)
Risk Management Benchmarking
Risk Management Benchmarking 5
Risk Management Benchmarking Types
• Results Based- Organization benchmarks on results/ outcomes (Trailing Indicators). Can include such items as:o “Open data sources”
o Frequency per man hour (OSHA like benchmarking)o Dimensions database/ WCRIo NCCI, etc.
o Risk Programo Cost of Risk per unit of exposure (FTE, sales, payroll, units)o Frequency per unit of exposureso Insurance retentions/ deductibleso Premium
o Claim Activity - Detailo Surveyso Advantages:
o Answers “how am I really doing?”o Gets management attention.
o Disadvantageso Maybe difficult to do.o Changes in results are slow to show.o Everyone wants to externally benchmark, but is resistant to sharing their own
internal data.
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Results Based Benchmarking Example (Internal)
Risk Management Benchmarking
Risk Management Benchmarking 7
Risk Management Benchmarking Types
• Open Data Sourceso Examples WCRI, OSHA, NCCIo Advantages:
o Usually easier to geto Doesn’t usually requiring providing your data.
o Disadvantageso May not be specific enough (may not be by class code, size of
organization, etc.)o May not be currento Benchmarks may not be useful.
Risk Management Benchmarking 8
Open Source: Examples
Average Incurred Benefit per Claim with More Than 7 Days of Lost
Time, 2010/2011. Source: WCRI
Source: Dimensions database valued 12/31/2003
Risk Management Benchmarking 9
Risk Management Benchmarking Types
• Risk Programo Advantages:
o Results based on financial performanceo Benchmarks appetite for risko Compares how well the program runs and what the prices in the
marketplace look like.o Might provide leverage for renewal
o Disadvantageso Usually very difficult to geto Information is usually proprietary.o Getting a data size that is statistically significant is difficulto Can be driven by market conditions, “long term” deals, financial
structure of the organization, etc.
Risk Management Benchmarking 10
Risk Program: Example
Risk Management Benchmarking 11
Risk Management Benchmarking Types
• Claim Detailo Advantages:
o Provides probably the best way to parse datao Can provide benchmarks for claim outcomes, TPA/ Carrier
performanceo Can provide details for valuable comparison such as
o Cost per employeeo Losses cost/ type by class code/ occupation
o Best for hardcore data analytics and “data mining”.
o Disadvantageso Requires exposure basis for best results (payroll, sales, units)o Jurisdictional influenceo Getting a data size that is statistically significant is difficulto Requires participants to share a lot of data
Risk Management Benchmarking 12
Claim Detail: ExampleClaim Detail Sample Benchmark
Risk Management Benchmarking 13
Risk Management Benchmarking Types
• Surveyso Advantages:
o Probably the easiest to executeo Can be made so as to not provide very sensitive informationo Tailored for specific industries.o Least time consuming for the participants.
o Disadvantageso Information may not be detailed enough to address
jurisdictional influence.o Benchmarks might be “general” in nature.
Risk Management Benchmarking 14
Survey: Restaurant Example
15Risk Management Benchmarking
Survey: Healthcare Example
Risk Management Benchmarking 16
Questions?
