The Risk Management Information System (RMIS) revolutionized the way risk was viewed and managed when it was introduced nearly five decades ago – and it has continued to break new ground ever since. What began as a way to bring together claims information from multiple insurers has developed into a powerful tool with sophisticated analytics to help companies better understand, measure, and mitigate risk.
Indeed, the analytics and insight available through today’s RMIS were once unimaginable. Yet the basic premise of keeping people and property safer remains at the heart of a RMIS. Let’s take a quick look back at how risk management information systems have evolved over the years and how that tradition of innovation continues to advance RMIS technology.
- The beginning of RMIS: When the first RMIS debuted in 1967, “risk management” primarily consisted of purchasing insurance and back-office claims processing and payment. Back then, insurers would send voluminous paper claims reports to interested companies, mainly to assist with recordkeeping. The handwritten or typed records of claims and payments then had to be rekeyed onto punch cards to transfer the information to a mainframe computer. The mainframe’s batch mode of processing, however, meant the data was at best 30 to 60 days old by the time a company would receive the loss-run report, which made it impossible to have an impact on any specific claim.
- The mainframe era: Eventually punch cards were replaced with paper (then magnetic) tapes, but mainframe technology prevailed for more than a decade. Technology, however, struggled to keep up with the demands risk managers had for more and better risk data. Even as extra reporting options were added, the capabilities of a RMIS were limited by the fact that users could not manipulate the data themselves. Mainframe computing time was simply too expensive to consider allowing users direct access to the data. Though restrictive, this process worked relatively well throughout most of the 1970s when risk was managed primarily through insurance. And then came time sharing. While still running on a mainframe, timesharing allowed users direct contact with the data through a “green screen” terminal. For the first time, risk managers could make changes to the data and analyze it directly, rather than through offline data entry forms.
- The PC era: Growing popularity of PCs in the 1980s ushered in a new era for RMIS by putting control of the data into the hands of risk managers. New PC-based spreadsheet programs offered easy-to-use menus and graphics instead of the cumbersome command-line interfaces used by mainframe terminals. At last, risk managers could not only access the data directly, but work with the numbers and ask “what if?” questions. The shift to PCs also represented a major reduction in cost. Programs that previously required expensive mainframe power could now operate on relatively inexpensive PCs and local area networks. As a result, more companies could afford RMIS technology.
- The cloud era: Spurred by business needs for more data and deeper insights, RMIS technology has continued to evolve and innovate. Today’s RMIS has moved from the PC to the cloud to efficiently manage the enormous amounts of data necessary to make intelligent, forward-looking decisions about risk. While claims management remains a popular RMIS use, a RMIS now offers dozens of other useful tools, including incident reporting, root cause analysis, exposure management, premium allocations, and more. Dashboards with visually appealing graphics help users effortlessly navigate through the system. Streamlined data collection, powerful analytics, and sophisticated reports make it quick and easy to access up-to-the-minute information, identify trends, and respond to emerging risks.
As powerful as today’s technology is, RMIS providers are constantly innovating to meet changing business needs in the ever-expanding discipline of risk management. The RMIS has evolved from a nuts-and-bolts claims tool to a fully integrated system that breaks down silos, unites disparate technologies, and opens lines of communication. Organizations using a RMIS can reduce costs by making smarter, faster decisions about risk. The next frontier of RMIS is unlocking the strategic intelligence of risk data to help organizations understand not just what happened, but why it happened, and what is likely to happen next through predictive analytics.