Unum

Risk management practices transformed by forecasting financial impact of business decisions and economic conditions

Published on 24-Apr-2013

"The risk management solution we’ve built adds a new dimension to our ability to identify and analyze the potential effects of large-scale, serious incidents." - John Swallow, risk manager, Unum

Customer:
Unum

Industry:
Insurance

Deployment country:
United Kingdom

Solution:
BA - Business Analytics, BA - Business Intelligence, BA - Risk Analytics, Smarter Planet

Overview

Unum is a specialist in financial protection insurance operating in both the United States and the United Kingdom.

Business need:
Unum needed to unify its siloed risk management processes, establishing both departmental and corporate­level oversight of risks and controls.

Solution:
Unum transformed its risk management practices by centralizing and expanding the scope of its risk assessments, accounting for not only liabilities but also operational and marketplace risk.

Benefits:
Helps the insurer avoid noncompliance penalties by meeting EU Solvency II Directive risk management requirements

Case Study

Unum is a specialist in financial protection insurance operating in both the United States and the United Kingdom. In its UK operations, Unum manages approximately GBP2 billion in assets, with policies covering more than 1.8 million individuals. It employs 1,000 people at its three main offices in Dorking, Basingstoke and Bristol.

The Opportunity
Like other insurers in the European Union, Unum, an insurance company in the United Kingdom, faces stringent new risk management require­ ments under the Solvency II Directive, which aims to protect consumers by ensuring that insurance companies maintain sufficient reserves of capital to cover all claims in full. However, Unum lacked an integrated approach to measuring the kind of operational risk outlined in the regulations. It needed to unify its siloed risk management processes, establishing both departmental and corporate­level oversight of risks and controls.

What Makes It Smarter
In 2008, the global economy woke up to the realities of catastrophic risk. Many companies and consumers were unable to recover their losses. Even some insurers and reinsurers, which are responsible for absorbing risk, became insolvent. It was clear that risk management practices across the insurance industry had to change. Unum transformed its risk management practices by centralizing and expanding the scope of its risk assessments, accounting for not only liabilities but also operational and marketplace risk. The company uses a sophisticated operational risk management solution to understand the complex interdependencies among departments that could affect overall financial health. The solution also enables Unum to analyze and forecast the potential financial impact of different business decisions and changing economic conditions, even worst­case scenarios. This visibility into every possible risk factor enables the company to plan ahead more effectively, reserving enough capital to cover the insurance claims of its customers.

Real Business Results
• Helps the insurer avoid noncompliance penalties by meeting
EU Solvency II Directive risk management requirements
• Reduces time spent aggregating data for reporting and analysis, enabling risk, compliance and audit teams to assess risk more efficiently
• Aligns day­to­day risk management practices with board­level decisions on risk tolerance, helping minimize avoidable losses by improving visibility of risk across the organization

For More Information
Please contact your IBM representative or IBM Business Partner. Visit us at ibm.com/openpages.

To learn more about Unum, visit www.unum.com.

Products and services used

IBM products and services that were used in this case study.

Hardware:
Power Systems running AIX 6

Software:
OpenPages Operational Risk Management

Legal Information

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