By Danielle Lutkus
Insurers are continually thinking of ways to innovate and transform their business to keep up with the ever-changing competitive landscape. Transformation projects come in many forms, including organization realignment, financial transitions, digital partnerships, technology modernization, acquisitions, and more. From a multi-week venture to a multi-year strategy, there is one thing all transformation projects have in common: RISK.
Risk must be anticipated, mitigated, and reacted to in an ongoing cycle through the duration of any project. In our work with insurers, there are three common categories of risks for transformation efforts: resourcing and dependency risks, process risks, and operational risks. In this blog series, we will dive deeper into these three areas and provide helpful insight and resources for mitigating risks that are often encountered in transformation initiatives.
Operational risk can arise from a lack of communication and structure in a transition project. Transparency across the operational teams and stakeholders is an essential element to a successful transformation initiative. Below are some mitigation strategies for maintaining the element of transparency against common transition risks.
Lack of Transition Accountability: During the transition, it’s essential to evaluate and redistribute all current state functions of people, processes, and systems to the future state. If the current state is not mapped and distributed to the right place in the future state, data is lost, compliance is impacted, or functionality is delayed due to a miscommunication of which people, process, system is handling the work/storing the information.
Remediate the risk of leaving a key function/process step behind by documenting current functionality in a capability map. Prior to transition, current state capabilities need to be reviewed and aligned to the correct future state system or resource. Following the initial mapping, use the information during the requirements gathering to work with vendors to determine how functionality will be handled in the future so processes can be documented accurately and gaps can be filled.
Problematic Data Retrieval and Conversion: In any transformation involving data migration,there is risk that if the data is not clean, organized, or easily converted, it could delay implementation.
Remediate this by working very early on what the data templates and requirements are so as much prep as possible can be performed in advance. It is important to understand data owners, data landscape, storage impacts, compliance, and future state considerations when planning for data transition.
READ MORE: Data Governance Accelerator
Unorganized Integration with Partners: Transition may involve integration with other internal teams, vendor partners, and systems. Coordinating across multiple teams during implementation can be tricky since they each have their own priorities, requirements, and timelines. If cross-functional interactions and dependencies are not managed correctly, it could impact the success of all projects.
Remediate the risk of cross-vendor communication by maintaining an enterprise-wide modernization roadmap that considers resource capacity, key dates, dependencies, and change management. Its also key to ensure that there are open lines of communication between all parties for the exchange of knowledge and a robust program management structure is in place.
Insurers must keep the larger organizational ecosystem in mind when undergoing a transformation as there can be upstream and downstream impacts for any change that is made. By keeping in mind the bigger picture when mitigating operational risk, you can do your best to ensure that each stakeholder is considered. By keeping the entire ecosystem in mind, it can make the impact of the transition that much smaller and help with change management.