5 Predictions for Risk Managers: Things to Watch in 2023

As risk professionals prepare to turn the page on the calendar, the team at LineSlip has compiled a list of predictions on a few things risk managers should monitor in 2023. 

1. Talent trouble expands at both ends.

Many industries, including risk management and insurance, face predictions of talent shortages. This is not a new issue by any means, but it will take on more urgency and expand to both ends of the demographic spectrum in 2023. One part of the problem is an aging workforce. Another, perhaps bigger, challenge is the industry’s inability to attract younger people. 

The Great Resignation, which emerged during the COVID-19 pandemic, has permanently altered notions about the workplace and the recruitment and retention of employees. Flexibility in work arrangements and programs designed to improve health and well-being has become table stakes for employers in virtually all industries. 

Employers overall will need to think more critically about staffing in 2023. Economic conditions will result in layoffs at some organizations, but others might encourage older workers to stay longer in their jobs, delaying retirement or phasing into it more gradually than they did in years past. This has the dual benefit of keeping skilled and experienced workers around while buying employers time to build the ranks of younger talent. A downside risk, however, is older workers are more prone to injury. Risk professionals will need to remain vigilant about workplace safety in the new year.

2. Technology adoption accelerates.

A long-term trend underlies this forecast. Risk professionals are having to do more with less, and new technologies help leverage their resources. We see companies everywhere implementing new systems and integrating emerging technologies such as artificial intelligence and machine learning. Gartner Inc. expects global IT spending to rise by 5.1% in 2023. Insurance companies are doing this as well, seeking ways to enhance their underwriting and claims operations and improve the customer experience. But tech spending isn’t going to happen just so the industry can say, “We’ve got the latest technology.” Return on investment (ROI) will become a focus and a key criterion in selecting new systems and software. 

For risk managers, the adoption of more technology increases exposure to cyber events – unintentional or malicious – that can disrupt business and lead to costly losses. We think 2023 will be a year when many more risk professionals increase their knowledge of new technologies and analyze the impact of those technologies on their organizations. 

3. Data requirements increase.

Greater reliance on technology means organizations will collect more data, and we foresee insurers raising their data requirements to offer insurance. This has been true recently in cyber insurance, and we think it will expand to other lines. 

In 2023, we believe data will drive underwriting activities more than ever to drive business objectives, and risk managers will need to be prepared to answer insurers’ questions. Without a doubt, more data can tell a better story about a risk management program, but risk professionals will also need to be sure they’re capturing – and acting on – the right data to reduce their total cost of risk (TCOR). 

4. Organizational risk cultures grow.

Esteemed management consultant Peter Drucker famously said, “Culture eats strategy for breakfast.” Even though he was reported to have said that back in 2006, we think it will be especially relevant in 2023. The point is not that strategy is less important than culture, but that every organization’s culture underpins its ultimate success. Cultural shifts also can prompt talent departures, which compound staffing challenges. 

This will be true for more risk managers, who will look to build cultures that are risk-aware and safety-conscious. Effective risk management programs will increasingly depend on cultures that embrace risk assessment and mitigation. 

5. Creative risk management solutions evolve.

Economic uncertainty will continue into 2023, and the insurance marketplace is likely to price that uncertainty into rates in most lines of business. 

As a result, we expect to see more organizations develop creative solutions to their risk management challenges. For some, that might mean utilizing a captive and retaining more risk, while for others, it might mean restructuring their insurance programs. In either case, it will be more important in 2023 to clearly see the details of existing risk management and risk transfer programs. 

We hope these five predictions for 2023 will be useful as you draw up plans for the new year. For information on how instant access to insurance program data and insights can help your organization be more prepared for what’s ahead, contact us here.