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.
Resourcing and Dependency risks are commonly encountered by insurers undergoing a transformation initiative. Transformations can be large and complex initiatives that involve the coordination of various people, processes, and technologies. Key risks within this category to look out for include a lack of user adoption, improper capacity management, and mismanagement of project dependencies.
Lack of User Adoption is a key risk in Change Achievement. Change is difficult from all perspectives. For example, when modernizing technology, it takes time to choose a new system, convert the data, train end users, and implement processes that support it. After spending all of the effort to make the transition, the last thing that a company wants is for no-one to use the new tools, let alone achieve the benefits of the new platform. Lack of user adoption can lead to timing delays during the process and potentially a product that goes unused once implemented, which ultimately has a cost implication.
Remediate user adoption risks by coordinating a comprehensive change management plan that aims to minimize the impact of the change through clear and consistent communication, active sponsorship, and the right level of stakeholder engagement. The purpose of change management is to moderate the length and depth of the change curve to save money, time, and energy. Employees at all levels, from the most senior to the most entry-level, will experience a predictable series of reactions to changes – the faster and smoother the path, the greater the success of the project or initiative.
Improper Resource Planning can lead to unhappy stakeholders and an overwhelmed team. Transformation efforts often involve resources that have day jobs and other projects on their plates to keep up with. If there is not a clear resource plan with backup capacity added in it can lead to burnout of key team members, and delays if the key resources are not available to make key business decisions.
Remediate this risk with robust project and capacity management. It’s key to ensure there is someone keeping an eye on all the projects and business as usual tasks for the duration of the transformation to ensure all projects come in on time and on budget while avoiding burn out. Planning ahead to have back up capacity for each key team member helps during implementation and in the long run to ensure there is not reliance on one resource for all knowledge.
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Mismanagement of Project Dependencies. Often a transformation effort includes multiple teams, processes, or systems that need to be in constant communication about interdependencies. There is a risk of duplicate work or missed handoffs if the ecosystem is not mapped out and projects are off schedule.
Remediate this risk by ensuring there is consistent and open communication between each team working on the transformation. It’s important to have someone in the role of liaison between projects to avoid missed targets or downstream impacts. Slowing down to speed up is key, sequencing multi step transformation projects in a logical order so that integrations are a one-time effort and as simple as possible.
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These process risks can be remediated with proactive action and continued monitoring. It’s important to remember that team resources are an important element in a successful transition, so mitigating risk in order to avoid burnout will benefit employees and the project alike. To learn more about project risk mitigation stay tuned for the next two parts in the series on Process and Operational Risks.