How insurers can strengthen their risk mitigation strategy
It should go without saying that risk is inherent in the insurance sector and organisations that can manage risk effectively can outperform their competitors. After all, how could a customer place faith in an insurer that can’t even manage its own risk? However, while managing and assessing risk is something that insurers do on a daily basis, vulnerabilities in an insurer’s risk mitigation strategy can easily be overlooked, particularly when it comes to security or compliance.
As such, it’s essential that insurers review their risk profile regularly and ensure that every potential area for risk is covered. In the first instance, this means that insurers must assess their most basic systems and processes for potential vulnerabilities. Failing to consider the fundamentals can leave insurers exposed to potential risks.
Back to basics
One of the most essential steps insurers can take is to ensure that risk and compliance is factored into every part of their company from the ground up. For many insurers, this may mean investing in software solutions and systems that have compliance and risk management built in, offering extra data protection to insurers’ operations.
By taking the time to invest in solutions that already consider risk and potential vulnerabilities for insurers, insurance companies can ensure that they are starting on a higher level of risk protection than they may have been previously. For example, insurance companies and assessors that use outdated technology or obsolete security software may be putting customer data at risk.
When it comes to investing in IT solutions that offer comprehensive risk protection, insurers should consider two key areas:
1. Cybersecurity
As the insurance industry increasingly moves towards a more digital environment, it’s critical that insurers are investing in solutions that offer a high level of protection against cybersecurity threats. To ensure data privacy and integrity, insurance companies and assessors must choose products that offer security protections such as:
multifactor authentication
high-grade transport layer security (TLS) implementation for web services
content security policies and cross-site request forgery (XSRF) protection for web services
rich role-based access control features
virus and malware protection.
Additionally, security solutions must also have data centre failover in case of disasters, a solid backup-and-restore strategy that is regularly tested, and account protection mechanisms. These mechanisms must include:
account suspension after a defined period of inactivity
account suspension after too many failed login attempts
strong password policy.
2. Compliance
When it comes to compliance, insurance companies must be aware of the correlation between compliance in one part of the business and all other lines of business. This is especially true for larger insurance companies, and some assessors, that are responsible for multiple lines of insurance business. For example, a lack of compliance in the motor division could lead to noncompliance across home insurance lines. Therefore, it’s essential that a risk mitigation strategy clearly assesses the potential impacts of noncompliance in one area of the business across the entire business.
Another challenge that insurers face when it comes to risk is that, even when their own systems are secure, the same may not be the case for every supplier or assessor they engage with. As such, there are numerous actions insurers must take to guard against security gaps created by their interactions with insurance suppliers. In particular, insurers should:
only give suppliers access to the minimum information and systems they require to fulfil their obligations, and review this access regularly
keep updated documentation about which suppliers have access to specific levels of company and customer data
where possible, choose partners in the supply chain that implement, adhere to, and regularly audit industry-standard security and policy controls such as SOC 2
for suppliers that do not have an industry-recognised compliance report, conduct regular audits using a security questionnaire to ensure compliance with the organisation’s standards.
Managing risk doesn’t mean simply avoiding it. In fact, risk is unavoidable and a key factor in how well organisations can survive and thrive in challenging business conditions. As such, it’s critical that risk management becomes part of the very fabric of an insurance company, stitched into every fibre from top to bottom.
The EstImage suite of products complies with local privacy legislation, Australian Prudential Regulation Authority (APRA) information security, business continuity, and is American Institute of Certified Public Accountants (AICPA) - SOC 2 Type II cloud data safeguard compliant. Stelvio has been working as a trusted and secure partner providing cloud-based technology to Australian general insurers for the past two decades.
For more information on how Stelvio can help your business enhance its risk protection with the support of leading technology solutions, contact the team today.