Finding the Right Combination


Software applications that are valuable aids in managing risk are proliferating. This is in contrast to just a few years ago, when users of "risk management" systems worked within the confines of "closed," menu-based programs. If you wanted to do something that was not part of "the system," you had to ask programmers to design a new form, report, or data table.

Due to "point-and-click" graphical user interfaces like Macintosh and Windows, more risk managers are using inexpensive, off-the-shelf software. Typical desktop computers can run a wide range of applications, including software developed both for "horizontal" and "vertical" markets.

Software for "horizontal" markets includes programs useful for virtually anyone. Software "suites" are available for under $500, and include word processing, spreadsheets, database programs, and presentation design. Running on a powerful, multimedia, network-capable, Internet-connected desktop computer costing less than $3,000, these are valuable productivity tools. Shareable laser printers, scanners, and color printers cost an additional $2,500. For a total capital investment of $4,000 - $6,000 per person, every employee in your group can be properly equipped.

All of your group's computers can be linked via a local area network for $1,000 - $2,000 per person. For a hypothetical group of 5 users, combined initial capital costs will amount to about $6,000. Recognizing rapid technical obsolescence, capital costs should be amortized over 3 years. Then, the annual cost per user is less than $2,000. Adding the related costs of backup, maintenance, education, and systems support, annual costs per person should range from $3,500 to $5,000. Measured against salaries, benefits, and office space, updating to the latest technology tools is only 5% - 7 1/2% of per-person employment costs.

Enhanced capabilities, faster response to ad hoc situations, and more efficient workflow justify such nominal investments. Many companies anticipate 20%-30% better productivity. They regard the decision to put the new technology on everyone's desktop as a "no-brainer." This fact is transforming the way we use information systems. You no longer work passively within the constraints of what is contained within a particular system. Now you can design and add new spreadsheets, database tables, and reports as your needs change and opportunities arise. This requires a "hands-on" attitude, and willingness to embrace and learn the basic desktop software tools. Every person performing a risk management function will enhance their capabilities and performance by developing these skills. This is a major cultural change from just a few years ago, when specialized training was required, and systems were not necessarily for everyone.

The next, more difficult step is to consider whether and how to obtain specialized, "vertical" software, such as Risk Management Information Systems. As the market for such applications is smaller than for "horizontal" software, the cost per desktop is higher. But such systems are needed to organize and manipulate the massive amounts of data relating to incidents, claims, certificates of insurance, and risk exposures. The cost of such systems ranges from $5,000 or less for a single-user Safety Management system to $50,000-$100,000+ for comprehensive, multi-user Claims Management and Risk Information systems.

The key is finding the right combination of horizontal and vertical software to meet your particular needs. Although desktop tools can be used to re-create many applications within industrial-strength risk data management software engines, doing so is tantamount to "re-inventing the wheel."

A better approach is to find a Risk Management Information System that meets a majority of your needs. Instead of asking the RMIS vendor to customize their system, you may develop your own extensions and supplemental applications, using software on your desktop. The best RMIS is one that meets a high percentage of your needs AND permits easy integration with desktop spreadsheets and database programs. To make it all work, you must take an active role, and learn how to use and apply the components available in your technology toolkit.

Allen Monroe, Founder of RiskINFO in Larkspur,California, can be reached by e-mail at
or (415) 927-8824.

Copyright 1996 RISK & INSURANCE. 747 Dresher Road, P.O. Box 980, Horsham, PA 19044-0980. Reproduced with permission of David Shadovitz, Editorial Director (215) 784-0910. Portions of the content herein first appeared in RISK & INSURANCE, in October, 1996.

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