Using data for business resilience: How companies can mitigate corporate risks with analytics

THE amount of data corporates have at their disposal is growing exponentially. But just because the data exists, it doesn't mean that it's useful or structured in a way that creates insights.

In all industries, corporates face challenges in making sense of the data they have and translating it into action. Yet approached in the right way, data can drive game-changing results in the way companies formulate strategies and make effective decisions.

One of the key learnings of the Covid-19 pandemic was that many organisations lacked the kind of data that provided transparency around the risks embedded in their operations and supply chains. This left many struggling to react as worst-case scenarios unfolded.

So, how can corporates raise awareness of such risks, and have adequate cover available and in place should the worst happen?

By consolidating proprietary data with additional analysis and third-party sources, corporates can get better insights into potential supply chain disruptions in real time as opposed to looking at historic precedents.

This helps them gain a better grasp of the magnitude of unexpected events, and develop strategies to manage and mitigate the associated threats.

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Stress testing of assets using a digital mirror

One example of data's power to inform and illuminate is the practice of creating digital twins - precise digital representations of real assets - that can be stress-tested against a pre-selected set of risk scenarios. This will be particularly relevant for corporates seeking a better understanding of their assets' exposure to climate risks for example, such as tropical cyclones or earthquakes. Analysing the results can provide actionable insights into the risks and impacts of such events, which will in turn enable corporates to formulate mitigation plans.

As part of a broader risk management strategy, a digital twin like those made possible with Swiss Re's Sustainability Compass can help customers to better understand their business portfolios' exposure to physical climate change risks in the near- and long-term future, as well as nature risks. This robust foundation of data helps the business to quickly identify and take a deep dive into hot spots to quantify potential economic impacts on their own assets, or even consider the impact of physical climate risks on their supply chain as part of the vendor selection process.

What we've just described underpins what we mean by business resilience: the ability to rise quickly following setbacks and the agility to pivot based on new emerging risks and opportunities. But how do businesses get there?

Creating the optimal foundation

Many corporates struggle to use data to make business-critical decisions, because reconciling the numbers takes too long or costs too much - or because anomalies in the data or data processing have resulted in inexplicable differences in the numbers presented by different units. Even with the best models, if the data input is not reliable, the quality of the output will be jeopardised.

Corporates need to have a holistic understanding of their business; both the underlying exposure profile as well as the threats to the organisation. Having a clear data strategy and governance structure paves the way for a single version of truth, which in turn is the foundation for leveraging data to build business resilience.

In a single version of truth, businesses are committed to relaying information and representing data in a standardised format for risk assessments to reduce redundancy and wasted efforts.

Resilience in practice

The key is to create alignment and buy-in to focus on an agreed set of metrics. A single version of truth acts as the primary building block to make solid decisions on the basis of credible, high-quality data. Too often, businesses cannot even agree on how data should be labelled or what the latest version of data is. With a single version of truth, everyone in the organisation has clarity.

At Swiss Re Corporate Solutions, the practice of a single source of truth is embedded in its business applications, reports and insights; this means working directly with approved sources, and feeding the results back into the evolving model.

Swiss Re Corporate Solutions' Risk Data and Services platform combines real-time data, state-of-the-art technology and data modelling, enriched with data insights from trusted partners. This provides the basis that not only customers, but also their customers, need to derive actionable recommendations that embed resilience throughout their organisations.

Bringing all the company's risk-relevant data together in a secure, integrated data platform creates the foundation for a one-stop shop needed to better understand and manage the risks facing the company. It also makes it easier for companies to consume risk and predictive modelling services as they develop. And with the right application programming interface (API) strategies, new risk insights from third parties can be delivered quickly and seamlessly.

With a strong data structure, risk managers have the necessary tools and capabilities they need to access meaningful risk insights faster, enabling decisions to be made with maximum efficiency and greater confidence. This confidence and the ability to act ensures organisational resilience is maintained, even as conditions shift and the risks continue to evolve.

Read more about Swiss Re Corporate Solutions here.