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Author's profile photo Joseph Pacor

Finance, Risk Management and Compliance for Insurers

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The subject of Finance, Risk and Compliance comes up quite frequently in the media today, as well as during many of my conversations. Insurers are under constant pressure to find effective ways to manage these areas, since the consequences of not doing so can be very costly. As an example, I think back to the $15.4 million in civil penalties against four insurance companies in connection with alleged improper payments (article here). Would better finance, risk and compliance processes have helped? I like rhetorical questions, so let’s move on and look at some practical approaches which can help in these areas. 

Managing Risk and Compliance

To manage risks and comply with regulations applicable to the insurance industry, companies must be able to adequately monitor defined risk indicators and assess compliance status at any given time. Companies must also be able to respond to changing markets and finance plans that affect compliance and policy processing risks. An IDC Global Survey sponsored by SAP reveals this tightening relationship between risk and finance. Recommendations for resolving these issues include:

  • Putting in place solutions that align finance processes with risk management and compliance strategies.
  • Improving the quality of risk management procedures and performance with built-in operational controls.


Responsible risk management and enhanced compliance monitoring, coupled with better financial forecasting, contribute to an improved financial state for insurers 

Accurate Finance Data Is Part of the Plan

Insurance companies also need to balance financial considerations with up-to-date risk data and industry regulation information. The need to assess regulation compliance and risks related to overall finance operations is imperative. This will contribute to the insurer’s success in achieving financial goals and business sustainability at lower costs.

Preparing financial plans based on accurate data is essential for managing financial and operational performance. Real-time assessments are needed for insurance companies to get a clear picture of business costs and revenues for stronger financial forecasting. With improved solutions for financial planning, analysis and monitoring, insurers can:

  • Gather large amounts of data, so they can rapidly adjust finance plans and investments according to market conditions.
  • Use modeling components to help improve the financial planning process.


With better accuracy in planning and analysis, insurers can optimize the performance of their overall operations. 


SAP Value and Business Benefits

SAP for Insurance solutions, like the Insurance Analyzer (watch video), help reduce business costs and improve financial operations, with complementary risk management and compliance monitoring capabilities. Through the use of efficient and integrated finance processes, companies have access to essential, real-time information, making it easier to take prompt business actions. The benefits are clear:

  • Better insight of finance and risk business performance, enabling quick, reliable decision-making.
  • Cost reductions resulting from integrated and efficient accounting, risk and financial processes.
  • Alignment of corporate and operational compliance goals across your enterprise


For more information, visit us here and please share your thoughts.

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