What's ahead for risk managers?

Over the last few years, risk management professionals have demonstrated resilience in overcoming a number of unprecedented crises. Those who have experienced previous recessions and other difficult market periods are all too familiar with how economic downturns can exacerbate risks and introduce new exposures. But with rising inflation, interest rates and looming threats of worsening conditions, is the insurance industry prepared for what's ahead? 

Below are my top three predictions for what risk managers will be contending with in 2023.

1. Tighter budgets driving careful tech adoption

As risk managers close the books on 2022 and begin to set strategic plans and budgets for 2023, they are likely to be taking a deeper look at their annual IT spend. Currently, the global insurance industry is in the midst of a seismic shift and organizations must cope with tighter budgets in an increasingly unpredictable economic environment. 

Reducing costs of IT budgets will be one of the top priorities for CEOs, but the industry is still in need of meaningful technological advancement. Adopting new processes and tools must still be prioritized, but it must be done carefully. With market conditions constantly changing, defined ROIs will be a core focus and key criterion in selecting new systems and software. 

Risk managers will be tasked with assessing the value of new programs, ensuring they are worth the spend. Technologies like artificial intelligence and machine learning, which can transform how risk managers analyze, report and manage data, while streamlining day-to-day processes, will be prioritized.

Any tech platform must drive value for any other enterprise IT investments that are already being employed, so sharing critical data among related software systems should be a key focus.  You don't want your enterprise solution to be an island.

Risk managers will need to demonstrate results that translate into bottom line savings and define for the C-suite how future initiatives will drive customer and business outcomes. Savvy risk managers know that past results are no guarantee of future savings, but they are useful for strategic budget planning, and for demonstrating department value. 

2. Doing more with less talent 

Risk management has not been immune to the Great Resignation. Organizations will need to think more critically about staffing in 2023 as the impacts of this shift linger. In an industry that already faces an aging workforce, difficulty in attracting younger talent adds to an already complex challenge.

This, coupled with continued economic turmoil, will bring a mix of results. For some organizations, layoffs are on the horizon. For others, working hard to entice older workers to delay retirement while they build the ranks of younger talent will be top of mind. 

Either way, the general theme is risk departments will need to do more with less – and continue embracing technological advancements and broader culture shifts to make themselves more attractive to the next generation workforce. 

3. Creative risk management solutions

Outside the control of any one risk manager is a major factor: the turbulence of the insurance marketplace as a whole. With long-term economic uncertainty comes price hikes across the board. Risk managers will be looking at rising costs across nearly all lines of business, and will be given the unique challenge of performing complex cost versus benefit analyses on key risks.

Smart, strategic and nimble risk managers will seek to diversify programs and maximize spend by employing new solutions, such as captives, restructuring and retaining more risk. This can only be done with a clear, birds-eye view of all existing programs.

Risk managers have experienced fundamental challenges in recent years and 2023 won't be any different. In a landscape of belt-tightening, risk managers will need to reinvent themselves and their industry with an eye on technology not just for job security, but also future growth.