Getting Business Continuity Planning Right During a Pandemic
COVID-19 is creating a unique set of challenges for businesses. Small, medium and large organizations are adapting and mobilizing their business continuity practices (BCP) to minimize the impact of the virus on top-line growth. While the events witnessed at the beginning of 2020 happen once in a lifetime, COVID-19 poses a real threat of re-emerging, albeit at a smaller scale, through regional outbreaks in the near future.
There are a multitude of future challenges to deal with and prepare for:
- Mixed results for BCP strategies: Due to an excessive dependence on human workforce, many organizations have faced BCP challenges. Business continuity and disaster recovery plans are being tested by rapidly evolving challenges, such as travel restrictions and a large-scale remote workforce.
- Equipment access: Businesses need to ensure that staff working from home are provided with the necessary devices, infrastructure, and training to perform their tasks effectively from remote locations.
- Communication: The ability to interact within the organization and with clients/customers is critical. Business operations must ensure that employees are set up to enable seamless internal and external communication.
- Controls and supervision: Organizations must ensure sensitive data is managed, keeping in mind all regulatory and compliance requirements. Businesses will need to rapidly deploy controls to meet and address this need in a distance-based operating model.
- Forecasting and planning: Organizations need the capabilities to simulate the impact events similar to COVID-19 would have on the company. These tools need to be institutionalized to ramp up business readiness. Gartner’s recent business continuity survey shows only 12% of companies have a plan for a pandemic in place.
How Does this Impact Businesses?
- New vulnerabilities: Allowing working from home potentially exposes businesses to various cyber vulnerabilities, communication risks, and other infrastructure and information security challenges. This includes issues related to areas such as personally identifiable information (PII) and protected health information (PHI). End points are vulnerable, especially when they are being used in less-controlled, non-corporate networking environments. In some cases, remote workers are allowed to connect from their personal laptops, which introduces risk as these devices do not normally have the necessary security controls and can be compromised in a variety of ways.
- Service suspension: This could occur if a sizeable proportion of the workforce is unable to work onsite due to geopolitical or health issues, such as a state-wide lockdown imposed by the government. Inability to connect to the office in order to support critical operations will impact service level agreements (SLA) and outages.
- Supply chain disruptions: Any gaps in IT strategies or infrastructure causes supply chain disruption. Companies often rely on a single geography or a single supplier for key products. Additionally, visibility across the extended supply network is key to optimize production levels based on demand. Having flexible logistics is critical to prevent cost leakage across the supply chain.
- Global impact: For many multinational companies, complex and business-critical services that are handled by global operations must be re-designed and restructured to de-risk the delivery of key products and services.
How Does this Impact the Insurance Industry?
The insurance industry has faced its own set of challenges as a result of this pandemic. Primary amongst them has been the volatility in demand for products and services. COVID-19 is affecting four components of the insurance value chain:
- Insurance brokerage and distribution: Brokers are experiencing normal to increased renewal closing rates over the past month. Clients are less inclined to shop for coverage, and want to get renewals done quickly. Even brokers with strong call center operations and technology platforms have faced challenges servicing demand.
- P&C carriers: Residential and commercial mortgage-backed securities could pose a significant threat as mortgage forbearances and defaults increases. Many policies in the US have language that excludes pandemic-related events. However, legislators in several states have introduced bills that would require insurers to cover COVID-19 related disruptions.
- Claims services: A backlog of claims work is mounting because adjusters are having difficulties accessing systems and application based at their office locations. This has resulted in increased delays impacting key process SLAs and customer experience.
- Warranty and finance insurance administration: With most automotive dealerships closed, many businesses that provide automotive warranties have seen a significant fall in the past month. Auto finance and insurance coverage sales will continue to lag until the broader economy reopens.
What are the Next Steps?
- Get the right team together to identify and prioritize the organization’s key processes and what would have greatest impact for the firm. This team would be accountable for planning and executing activities during an outbreak. Communications to employees, clients, suppliers and partners should be rolled out as part of a phased approach.
- Technology enablement for remote working: Enable people to work and connect with colleagues from different geographies. Information security and compliance should be taken into account when enabling remote work. Employees should have ability to perform critical processes that deal with PII and PHI. Consider running video sessions to maintain quality and compliance around how to deliver service.
- Review existing BCP: Companies should review, update, and test their current BCP plans and checklists to minimize any potential disruption to essential services or activities.
- Revisit client contracts and master service agreements: Communicate with clients and formulate an agreeable and de-risked approach to enable work from home processing, ensuring controls are in place to manage client PII and PHI data.
- Build a digital ecosystem for high performance teams: Companies need to develop high-performing teams across digital and human labor. This should include leveraging digital solutions, such as robotics process automation (RPA), machine learning (ML), artificial intelligence (AI), analytics, and both onsite and remote human labor. The goal is to develop an operating model that minimizes any future impact of an event like COVID-19 by building operational resilience, efficiency and improving customer experience.
What’s the Right Long-Term Strategy?
- Ramp-up a Digital Workforce: Companies need to introduce an integrated human and digital workforce. Mundane tasks are automated using software and bots, and employees can focus on analytical work and customer relationship management. It is possible to achieve effective unattended automation by creating a human + digital workforce to ensure continuous operations while using real-time monitoring, analytics, and artificial intelligence. This entails augmenting the digital workforce using chatbots, cognitive virtual assistants (CVAs), and intuitive intelligent voice recognition (IVR) to avoid, eliminate, and deflect call volumes and improve customer satisfaction. Leveraging advance optical character recognition (OCR) and intelligent character recognition (ICR) solutions to digitize data and move to paperless operating models will result in improved downstream operational efficiency.
- Harness analytics: Unleash the power of data to provide fact-based insights for improved operational efficiency. Data models can inform claim adjusters of the next best actions to take on their claims, freeing up capacity and driving increased accuracy. Similarly, litigation propensity and severity models can lead to improved and faster claims settlement.
- Ensure continuous monitoring: Digital workforce can also be used to test continuous system readiness checks for BCP. This includes simulated scenarios and drills for regional outbreaks. By establishing a central command for virtual, WFH, and on-site workforces, organizations can measure productivity, compliance, quality, people engagement, and well-being.
- Adapt to change: Companies need to start adapting to a distributed global service model. The use of video conferencing solutions and collaborative workspaces should be evaluated and brought within the ecosystem.
Insurance Consulting, EXL
VP & Partner
Global Head of Digital Consulting for Insurance, EXL
AVP, Insurance Consulting
Property & Casualty, EXL