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23 Jun 2011:
IBM (NYSE:IBM) today announced that UK-based Unum, part of one of the largest employee benefits companies in the world, is using IBM software to improve the management of operational risk throughout the company and to support the requirements of the upcoming Solvency II regulation.
To comply with the new regulation, which aims to strengthen protection for all insurance policyholders, Unum is using IBM OpenPages software to provide them with comprehensive operational risk management capabilities.
The solution assesses all internal and external risks and ensures that Unum is sufficiently ready to cover them. It provides the insurer with enhanced insight and control of risk data across the enterprise, which enables a smarter allocation of capital. It also enables Unum to eliminate risk management silos across the organization, hence allowing for increased efficiencies and improved decision making.
For example, insurance risk management has typically focused on insurance liability, based on known risks and associated historical data. But while this historical data is critical to the aggressive pricing of certain products such as life insurance, this approach is not appropriate for quantifying internal operational risks, such as malpractice or internal system failure.
“As a global insurance leader, we need to ensure we meet regulatory requirements,” said Kevin Borrett, UK head of risk at Unum. "We searched for an integrated solution that helps us better understand and proactively manage the risks that can impact our business, both at the corporate and divisional levels. IBM OpenPages provides us with a powerful reporting and analysis solution which enables us to better manage risk and make more informed decisions across the enterprise. It offers a true holistic view of risk within our organization and helps to embed risk management and governance into our overall corporate culture."
Coming into effect in January 2013, Solvency II provides more sophisticated regulatory requirements for insurance firms operating in the European Union to bring together insurance services in Europe while protecting consumers more effectively. Traditionally, insurance companies have focused on analyzing accumulated data to assess conventional risk such as life expectancy and the likelihood of accidents. They have managed operational risk in silos, where separate business units maintain their own data, analytics and assumptions, without taking complex interdependencies among multiple risk factors into account. Few organizations have an integrated approach to measure their operational risk as outlined in Solvency II.
As part of IBM Business Analytics, the IBM OpenPages software is a key building block in implementing an enterprise-wide approach to governance, risk and compliance management. It combines all risk data – self assessments, end user surveys, loss events, scenario analysis and key risk indicators – into a single solution. The software delivers an automated workflow and executive dashboards that provide management with the visibility, control and decision support required to analyze, manage and mitigate risk to optimize business performance.
“Many insurance providers are currently investing in analytics technology to improve their processes and prepare for upcoming regulatory changes,” said Gordon Burnes, director of OpenPages product marketing at IBM. “Deploying IBM OpenPages enables companies such as Unum to really focus on what’s important and to avoid unexpected outcomes while improving performance. For instance, few insurers have sufficient historical data to adequately model operational risk in the same way they do for financial risk, so we help them to change that.”
Unum is a leading global provider of employee benefits products and services, and the largest provider of group and individual disability income protection insurance in the United States and of group income protection insurance in the United Kingdom, providing protection to 25 million people worldwide.
Notes to editors:
For more information on Unum, please visit: www.unum.com
For more information on IBM Business Analytics, please visit: http://www.ibm.com/software/analytics/
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