THE POWER OF DATA IN MANAGING RISK

DATA IS A POWERFUL TOOL FOR UNDERSTANDING AND MANAGING NATURAL CATASTROPHE RISKS FACED BY LOCAL GOVERNMENTS. MANY COMMUNITIES IN BRITISH COLUMBIA ARE AT RISK OF EXPERIENCING CATASTROPHIC EVENTS, SUCH AS EARTHQUAKES. HOWEVER, THE FREQUENCY AND SEVERITY OF OTHER NATURAL DISASTERS ARE ON THE RISE AS WELL. TO EFFECTIVELY MANAGE THEIR INFRASTRUCTURE, ENSURE SUSTAINABLE SERVICE DELIVERY, PLAN FOR FINANCIAL PROTECTION AFTER A LOSS, AND PRIORITIZE RISK MITIGATION, LOCAL GOVERNMENTS MUST CAPTURE CRITICAL DATA WITHIN THEIR INFORMATION SYSTEMS.

Understanding what constitutes good data and why it is important can assist with future financial resiliency. From an insurance and risk perspective, both internal and external sources can be leveraged to manage short and long-term financial goals effectively.

Insurance companies rely on data to underwrite and model property risks, particularly those related to natural perils. Accurate and up-to-date details in your asset inventory are essential to correctly price the associated risk of physical damage. Key data points include accurate building and contents replacement values, full street addresses with postal codes, construction type, year built, number of stories, and square footage. Data is also critical for understanding liability risk.

Differences in asset location, type, age, size, and occupancy can significantly impact vulnerability assessments for various natural perils. Therefore, inaccurate data can lead to inaccurate assessment of risk and premium calculations. Missing data adds uncertainty to risk analysis and often results in additional premiums to compensate for additional risk. Data accuracy is vital in this regard.

Some risk information may be more challenging to capture at the local government level than other risk information. Collecting up-to-date data and conducting analysis on property and liability claims history can inform risk mitigation strategies, and ensure adequate insurance coverage is available, where appropriate, to cover identified risk exposures. Make sure to connect with your insurance partner to assist with both data collection and data analysis.

Capturing comprehensive data on insurable asset inventory is essential to fully understanding the physical risks associated with these assets and effectively managing them. In this respect, asset management and insurance data capture share common building blocks and can be leveraged to accomplish the common goal of helping local governments be more cost-effective.

Tips For Capturing Good Data

1. Appraisals and Loss Control Inspections: Obtaining routine replacement cost appraisals will assist in capturing many of the data components used to analyze risk. Similarly, loss control inspections often capture key pieces of information, while at the same time identifying low, medium, and high-level risks with core assets to help prioritize funding.

2. Claims History: Establish a routine process for collecting claims data from insurance partners.

3. Collaboration: Data collection and quality require an iterative approach starting with the information you have and building outward through collaboration with team members, outside experts, and partners.

By harnessing the power of data, local governments can enhance their ability to manage natural catastrophe risks, make informed decisions, and ensure the resilience of their communities.

NICOLE PURVES is the Director of Insurance Services at the MIABC. Nicole has worked in the insurance industry for over 25 years, primarily involved in claims handling and commercial insurance services. She has been with the MIABC since 2008. She has also received her designation as a Chartered Insurance Professional and is also a licensed insurance broker.