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Sleuthing to solve risk challenges
September 22, 2015
I am not a frequent watcher of television programs, but lately I’ve gotten hooked on a popular show that strikes me as having a strong connection to managing and underwriting risk.
My teen-age son this year started taping re-runs of “NCIS,” and it has quickly become one of our family’s favorite series. This show about the Naval Criminal Investigative Service in Washington, D.C., just kicked off its 13th season in September. NCIS is a real-life agency of the Department of the Navy, but the stories on the TV are fictitious. According to Nielsen, NCIS is the most watched show on network television, and it has generated two other spinoffs of the concept, set in Los Angeles and New Orleans.
A crime show with a connection to risk management? As I think about it, the common element is they’re both about finding answers to achieve certainty. “NCIS” most often is about homicides involving U.S. Navy or Marine Corps personnel or matters of national security onshore, afloat or in cyberspace -- dramatic topics, to be sure. The field agents working the cases are pursuing answers: Who did it? When? How did it happen? What does the evidence show?
From Sir Arthur Conan Doyle’s “Sherlock Holmes” and Agatha Christie’s novels to Detective Joe Friday in the TV series “Dragnet” to the proliferation of current shows on cable, people have long been fascinated by the whodunit.
On “NCIS,” Special Agent Leroy Jethro Gibbs, portrayed by actor Mark Harmon, is known for his gut feel about suspects, even though his team uses cutting-edge technologies to solve crimes. One of his character’s oft-cited rules is “There’s no such thing as a coincidence.” Gibbs is unrelenting in his pursuit of answers. It’s in our nature to seek answers, especially when something bad happens.
Imagine applying detective skills and forensic science to solving risk challenges. A relentless pursuit of and analysis of the facts could identify the root cause of a loss. Analytics and data are touted as crucial tools in business today. It’s hard to argue that better decisions can be made on the basis of gut instinct when data sets are available. There are stories in numbers, and interpreting those stories is easier with experience.
Will technological advances ever eliminate the need for gut feel? The rise of artificial intelligence and automation make it possible to narrow the set of decisions that human beings must make, but I for one hope that human judgment continues to be important – especially when it comes to understanding risk.
Property risk is largely driven by natural perils. Liability risk, on the other hand, results mainly from human behavior (or misbehavior). In either situation, it takes an understanding of human actions to mitigate or prevent losses.
A highly successful underwriter at Lloyd’s once told me that he appreciated the value of data in understanding risks, but he said it was crucial to exercise human judgment in the decision to write a risk. Why? Because experience is a great teacher, and sometimes data can lead to false conclusions. That is certainly true when the quality of the data is in question, as many property underwriters learned a decade ago in Hurricane Katrina. Assumptions made on faulty data can be very costly indeed.
Data quality has improved materially in the years since, which is good news for both underwriters and risk managers. And there are better analytics to accompany more accurate data. That adds up to powerful tools to support decision making. When human experience is layered on top of data analytics, confidence in risk managers’ or underwriters’ ability to find answers and make good decisions should be high.
Every great detective appears to have a sixth sense when it comes to finding answers in the evidence to solve the case. That applies to great risk managers, too.
Regis Coccia is an insurance journalist and content strategist. His columns on insurance and risk topics appear periodically on Fast Fast Forward.
The views expressed in this column are the opinions of the author and do not necessarily reflect the opinions of XL Group.