It's easy to throw shade on risk like it’s a bad thing. But all innovation involves risk. Which isn’t necessarily bad. Not if the consequences of being wrong about it don’t pose an existential threat. But businesses everywhere are struggling to cope with doomsday scenarios such as climate change, cyber smash-and-grabs, the global COVID-19 crisis, and more.

Looking ahead, risk trends will continue to evolve as digital transformation accelerates, as the remote work trend mainstreams, and as enterprise spending on the internet of things tops $1 trillion by 2023. For context, overall IT spending is expected to surpass the $4 trillion mark in 2021, up 8.6% from 2020 according to analyst firm Gartner. But here’s the kicker: just 22% of CEOs believe they have a risk-management playbook to sustain the resiliency and long-term success of their business.

Here's the thing: 9 out of 10 insurance companies say they’re struggling to develop the technology infrastructure they need because of legacy software and gnarly IT systems according to McKinsey. Not to mention that legacy processes can be super complicated. Or that digital transformation requires more than just giving legacy processes a digital facelift. We're talking about a fundamental transformation of legacy workflows with a customer-centric approach. The question, though, is how do you do that and strike the right balance of human and digital processes?

And if you can do that, how can you also get the most out of powerful technologies such as low-code, robotic process automation (RPA), AI, and machine learning to automate processes and integrate legacy systems across your organization to create a single, connected layer that speeds customer engagement and drives top-line growth?

Enter 'connected insurance,' a concept that has caught on with insurers seeking to combine automation technologies to elevate customer experience, quickly adapt to change, and sustain long-term growth in the post-COVID world. Which is a good segue to our conversation with Rohit Puranik, Global Head of Insurance Partnerships, Alliances, and M&A at Infosys who breaks down digital risk and other noteworthy trends shaping the future of the more than $5 trillion global insurance industry. Puranik serves as Global Head of Insurance Partnerships, Alliances, and M&A at Infosys. The following transcript of the interview has been edited for brevity and clarity. 

Appian:

Talk about the future of risk management with the massive change we’ve seen with the COVID-19 crisis. What do you see as the major long-term challenges for insurers and other businesses in the wake of COVID?

Puranik:

The pandemic accelerated investment in hyperautomation. But advances in digital technology come with benefits and challenges. There are tons of benefits, and we can talk about those later. But I also see tremendous challenges in trying to automate critical processes across the organization and extracting information from these processes.

Mitigating Risk in Automated Decision-Making

Appian:

Can you be more specific?

Puranik:

Yes, one of the challenges companies are facing is building end-user and consumer trust in how they extract and leverage data from their processes. I think building end-user and consumer trust in how you do that is essential to succeeding with hyperautomation.

As an organization, you have to be really diligent about how you do that. I’m talking about stress testing how you implement your hyperautomation strategy. And that means spending more time in deciding which specific business processes and use cases to digitize.

Appian:

Let’s stay on that point for a moment — the decision-making process around implementing hyperautomation. We see lots of cases where decision-making gets automated in insurance and many other industries. In the past, people made many of these decisions after looking at data.

But some critics say too many decision-making processes are being automated without human involvement. As Global Head of Insurance Partnerships at Infosys, what do you make of that argument? How do you take risk out of automated decision-making, and how do you see human and digital processes fitting together?

Puranik:

So, let's talk about some specific examples. Let’s take claims as a business process. With smaller claims, there's usually no manual intervention required. Processing of these kinds of claims can be fully automated. But complex commercial claims, for example, have different data points and different channels where volume is very high, such as email ACORD (Association for Cooperative Operations Research and Development) forms and email FNOLs (first notification of loss forms). 

So, technology enables you to automate the complexity of the commercial claims process. But that also means more diligence is required for the data that you feed into the decision-making process.

Low-Code Speeds Reaction to Cyber Risk

Appian:

On a related note, let’s talk about cybersecurity. With every new technology, there’s a new threat. Talk about cyber risk as it relates to attacks on algorithms and machine learning, and how you see the situation evolving post-COVID in insurance. What are the implications of cyber threats for insurance, and what’s the best way for the industry to adapt?

Puranik:

Well, we're seeing increasing demand for building cybersecurity capabilities within the enterprise because of COVID. There are more digital channels now. There’s growing demand for applications, and customers are benefitting from that. But I’ve seen reports citing a 27% increase in claims related to cybersecurity. It could be ransomware or data breaches. The explosion of digital has opened up more channels to customers. But that means we’re also seeing more vulnerability in enterprise processes and a related increase in commercial claims.

Appian:

As you think about process automation and how low-code development enables it, talk about the role that low-code platforms can play in helping us do a better job of managing cyber risk in insurance and other industries as well.

Puranik:

So, one critical part of responding to risk is how fast you react. It could be a new product line. It could be building or integrating disparate systems across the enterprise to deploy a new capability. It could be connecting to your Intelligence Layer and orchestrating the risk management aspects. A low-code platform allows you to do this faster. It allows you to integrate different systems quickly and effectively to implement your business strategies.

Appian:

What do you make of the argument that during COVID companies that took advantage of low-code were better positioned to minimize risk than companies that didn’t?

Puranik:

I think it’s risky not to consider adopting a low-code platform like Appian. It's not only an operational advantage. It's also a better, faster way to grow your business, and launch new products. I think it's high time that companies replace legacy thinking with a transformation mindset that focuses on adopting low-code application development.

Business Case, Then Technology. Not Other Way Around

Appian:

I want to go back to something you mentioned earlier. You said that the pandemic accelerated the digital transformation movement. I think we can see evidence of that just about everywhere. That said, how should insurance industry decision-makers view blockchain and other emerging technologies in the context of digital transformation?  How should they be thinking about these trends from the standpoint of risk management, governance, and security?

Puranik:

I think technologies like blockchain, AI, and machine learning should be viewed from a business standpoint. That’s what we’ve been advising our clients to do. So that means looking at the business case and not the technology first, and whether it makes sense to optimize the business case first, and not the other way around. If you want to make changes to your business processes, then see what technologies can help you do that, and add value to your customers and your organization.

I chair a board for a local nonprofit. We talked about the use case and applicability of blockchain in the organization. But I think generally blockchain is being used in silos, in pockets in insurance such as smart contracting, or maybe in some cases around claims. We’re seeing some use cases in financial services and transportation. There is certainly applicability with insurance. Infosys took note of that five years ago, but we haven’t seen blockchain emerge as a major point of conversation among carriers.

Appian:

Beyond blockchain, let’s talk about the concepts of 'connected claims' and digital trust which we touched on earlier. These topics are really relevant now with the explosion of AI and machine learning across insurance and other industries.

Puranik:

Right. I mean a growing amount of consumer information is available to carriers and other businesses. I’m talking about financial history, health records, and other personal information. 

Sharing this kind of data is regulated and protected by law in many countries. A carrier may think they are using the information to enable or to improve the customer experience. But there’s always the element of consumer trust involved.

I mean, if I call my insurance carrier and they don't have an answer for why they want my personal information that’s a problem. So, I think the challenge is to build trust, especially in a business-to-consumer environment. Customer data is a carrier’s secret sauce. It’s a pivot point. And if that information starts getting exposed, it erodes trust, and that’s a serious problem. I hope that makes sense.

Appian:

It does. But can you talk about the idea of connected claims processing and how automation fits into that? Talk about the big idea of connected claims as it relates to the underwriting process.

Puranik:

Connected claims means automating claims intake and increasing straight-through processing, and the process is actually widely used by some major carriers. It’s a big benefit for consumers. 

For Infosys, for example, we’re able to accelerate the processing time for a claim from two to three days to just four hours. I mean, that's huge for consumers.

Low-code, Big Data, and Mitigating Risk 

Appian:

Let’s switch gears again. Data is critical to analyzing trends in any industry but especially in insurance. Talk about the relationship between low-code and data and data analysis in insurance.

Puranik:

Right. If you think about it, insurance is about risk and risk management. Ten years ago, data mostly came from third-party sources. But with today’s technology, carriers can access more data than ever before. Today, data is captured through IoT devices in commercial buildings that capture data and pass them back to a remote server. Or data could be gathered via a drone that captures, posts, and previews information and shares it with other systems.

Appian:

The internet of things (IoT) is evolving fast. We’re already generating tons of data from wearables and industrial devices. So, talk about risk management in the context of this megatrend, and how low-code fits into the story.

Puranik:

There are different risk models that data can help in managing claims and underwriting. Every day, new data sets are being created that were not possible in the past. And if we can use this data to optimize operations, it can also improve customer experience and drive top-line growth.

But the key is in how this data gets used. And that's where low-code comes in. It’s a better way to integrate data across the enterprise. This matters because data is everything in the insurance world. 

Puranik:

When I think about leveraging data, it could be a simple video recording of property damage. But a low-code platform like Appian enables us to analyze the data and share it with either a claims or underwriting process. And so that's the key. I think a low-code platform like Appian accelerates data capture and analysis and improves the speed and accuracy of the decision-making process.

Appian:

Before closing out, I wonder if you would provide some quick pragmatic tips for mitigating digital risk and staying ahead of the risk curve over the next 10 years.  

Puranik:

I think the important thing is to focus on building organizational resilience in the post-COVID world, right? I think it’s essential to put customers at the center of everything that you do. And by customers, I mean end-users, your employees, and your business and technology partners.

Think about technology as an enabler of better customer experience. Don’t allow technology to drive your strategic thinking. 

But with the help of a low-code platform, you can get the most out of technologies like AI, blockchain, and machine learning to bring value to customers in any organization.