Insurance Business ReviewAPRIL 20258IN MY OPINIONRISK MITIGATION WITH CONSISTENT DATA MANAGEMENTBy Roy Hock, MBA, ARM, Director of Risk Finance and Casualty Insurance, Valero Energy CorporationRoy Hock is the Director of Risk Finance and Casualty Insurance at Valero Energy Corporation. He earned a Master of Business Administration from the University of Texas at San Antonio, a Bachelor of Science from Texas A&M University and holds an Associate in Risk Management (ARM) designation. He joined Valero in 2020 and where he provides leadership over Valero's Casualty Program, Risk Administration & Finance Group, and the company's insurance captive. Before joining Valero, Roy served as Director of Risk Management at TETRA Technologies, Inc. and Senior Manager of Risk at Pacific Drilling S.A. Roy has also held various roles in account management, underwriting and reinsurance at international brokerage and insurance companies respectively.Referring to the term captive management from a captive owners' perspective, Roy Hock illustrates its similarities with the needs and goals of the commercial insurance ecosystem, i.e., better control of data to drive better decisions. This article delves into the positives and negatives of implementing and risk management information systems (RMIS) for captive owners to provide an insightful view of RMIS implementation in the captive insurance industry. Risk Management Information Systems and Captive ManagementIn over 25 years of my career, I have built aspects of or fully implemented many RMIS to help the company meet its goals. Truthfully, I was not always successful in the task, with bureaucracy, lack of buy-in and general management misunderstanding of how a good system works being some serious stumbling blocks. However, we got it right, and yes, it is a "we" because you can never implement a good system without a lot of help. It was not until recently that I turned this system-focused approach to the world of captive management. The Positives of RMIS: Data, Data, DataGathering, analyzing, reporting, and owning good data is key to any successful Captive RMIS. Thinking through how the data will be gathered, vetted, input, stored and interact across the system is key to getting the most benefit. From carrier ratings, policy exclusions, causes of loss, vendors and ERM, a simple and standardized data implementation will serve a captive well. This data integration will enable more precise analysis of risks, policies, premiums, claims and incidents, leading to better risk management and more informed decision-making. Think trends not just in risks but in the financing of those risks and return on investment (ROI). I will note, I am not sure what the future holds with artificial intelligence (AI), but I cannot foresee a future where a fair amount of simple standardized data doesn't retain its intrinsic value in the decision-making process at least for us humans.Efficiency and Cost SavingsA well-implemented RMIS should inherently enhance captive operational efficiency. In fact, this is often one of the main drivers for a company seeking out an RMIS. This does not always mean less overhead but enables the captive to allocate resources more effectively towards improving financial, exposure, coverage and risk mitigation strategies.Roy Hock
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