Holistic Risk Management: Is Insurance Ready for the Shift?

Brian Hunt is a Texas native whose career focus includes insurance and risk management. Today, Hunt is a VP at USI, the seventh largest insurance broker in the country, where he specializes in construction and real estate.

“It’s not my job to tell you what you want to hear. It’s my job to tell you what you need to hear,” said Hunt. Insurance used to be transactional: the client would go to dinner with the broker, and the policy would be decided for a year. Now it’s more of a partnership and risk is considered on a holistic level. Hunt believes that approach is primarily due to natural disasters and global events.

“You need to have a risk advisor who’s thinking outside of the box a little bit, someone who is considering a global or regional conflict somewhere and how that’s going to impact [your business],” said Nowak.

The pandemic taught us a lot about how linked and connected our globe is. When it comes to insurance, that means understanding all the relationships or events that could impact your business. “Awareness is more important than anything else,” said Hunt. “With modern technology and tracking, we have more data than ever before.”

Using that data and knowledge, insurers can quantify the risk of some aspects of the business. This process is part of effective risk management. Of course, this starts with transparency between the insurer and the company. “You need to think about your risk but specifically what is your plan if the worst-case situation occurs,” said Hunt. It comes down to knowing all the links in the chain and identifying the weakest links.

Further, Hunt describes how the advent of “Big Data” has led to new parametric-based insurance. These new solutions are now available to transfer risks (e.g., weather) that in the past were not covered by traditional insurance. In addition, event-based options are now available to help provide additional risk strategies from macro-level events.

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