Overview / Background:
Company XYZ, a property and casualty insurer, has a strong record of using data analytics to manage market risk, credit risk, and insurance risk. After a risk and control self-assessment revealed greater than expected operational losses (largely from fraudulent automobile accident personal injury claims), Company XYZ decided to commit the necessary resources to bolster its operational risk program. The company’s stated goal is to have an operational risk management program that performs at the same high level as its other risk programs, all of which are to report into a single chief risk officer.
Company XYZ already has in place an industry-standard special investigations unit (SIU) that is responsible for investigating claims that are suspected of being fraudulent. The unit is understaffed, however, so it is unable to address the high volume of auto accident bodily injury claims that are deemed suspicious in the claims adjudication system. Company XYZ decides that its established SIU is the appropriate operational risk function on which to begin bolstering its operational risk management program. Among the investments needed by its SIU to address operational losses to fraudulent claims, XYZ identified a top priority as a greater investment in data analytics to better help it rank order those claims that are most suspicious.
Company XYZ has also identified a need to invest in a risk management system to consolidate risk data from the entire organization, not just its SIU. Further, the company believes its risk management system should provide robust visualization of internal loss data and also integrate external loss data (to be made available by subscription).
Visualization is an increasingly valued complement to data analytics. Operational risk management programs are among the many business functions that wish to incorporate not only sophisticated analytic capabilities but also visualization capabilities that allow analytic results to be communicated meaningfully to a broader audience. The accumulation of greater volumes of internal loss event data and the increasing availability of external loss event data only increase the demand for robust visualization capabilities.
Prompt: Company XYZ’s chief risk officer has asked you to expand the scope of your risk management systems evaluation to include visualization capabilities to support the operational risk management program.
Tools: Tableau, Rstudio.
Address the following critical elements in your response:
- Industry-Standard Visualization Techniques What are the current industry-standard risk management visualization techniques? Which ones have the potential to support the organization’s general risk goals? What supporting evidence or documentation is available to support your conclusions?
- Visualization Proposal Propose visualization strategies that support the organization’s programs, policies, and strategies for risk assessment and management. Justify your proposal(s) with relevant research and examples where appropriate.