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GETTING REAL WITH AI: 5 AREAS FOR STAKEHOLDERS TO ACTIVATE

By Jelena Stankovic, Content and Communication Lead at SAS

 

There is a lot of excitement about AI, but somehow the reality is not really living up to the hype. At the moment, we don’t see enough real results or use cases emerging, even though everyone agrees that there is huge potential. I polled some of our experts to find out why this might be happening and identified five critical barriers that need to be overcome for AI to move into the mainstream.

 

1: You need a lot of data to build models

AI-based models probably need even more data than most because they need to learn for themselves. The explosion in the volume of data available from the Internet of Things, and particularly the increase in streaming data, should have made AI models far more ubiquitous. However, far too many organisations have not really caught up with this.

Joao Oliveira: “Streaming data is still an untapped resource for many, meaning that they are missing out on the power of analytics.”

Arturo Salazar: “Many have failed to appreciate that they may need to go hunting for new sources of data.”

Ivor Moan: “Data preparation is crucial for getting value from data. Skimp on the data preparation, and you will find that you cannot rely on your analytical results.”

In other words, organisations that do not pay enough attention to data, and especially data quality, will fail to capitalise on AI.

 

2: Many models fail to move into production

Developing a model is relatively straightforward. The process often involves a number of different individuals and departments. Indeed, development and deployment are so different that they almost look like two separate life cycles, a bit like a salmon’s move from river to sea (and back again), according to James Ochai Brown.

Different skills are required, both project management-related and technological.

 

3: Users need to be able to understand insights from models

The best model in the world is only useful if it leads to action. That means that users have to be able to understand and interpret the outputs from the model to provide useful insights. Data visualisation is a crucial part of this process.

Data scientists, therefore, need to think about how they will demonstrate the outputs from their models to maximise the impact on viewers, for example, by asking themselves about the audience, and the message they wish to

convey.

 

4: The real benefit of AI is business model transformation – but that is a long-term project

According to Christer Bodell, any organisation can introduce a single AI-based project or model, and it will improve current business practices. Getting real benefits from digitalisation requires something more: a genuine change in philosophy and a commitment to innovation that is likely to result in business model transformation.

This requires a longer-term change in thinking, says Andreas Godde, and particularly a focus on how value is generated for customers.

 

5: You need more users to increase use of AI – but they need to see others using it first

There is a book by Geoffrey Moore called Crossing the Chasm. It describes the difficulty of moving from “early adopters,” those who adopt a product because it is new and interesting, to the “early majority,” who will use products

because they are useful. The early majority need to see products being used by people like them, to solve real-world problems. AI faces a similar challenge – that at present, people do not see enough real-world examples of AI being used to solve problems.

Generate some of those, and particularly examples that show how AI can improve customer experience, and both companies and customers will be more prepared to accept AI and move across the chasm.

 

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Technology

HOW CHARITIES CAN MEET TOMORROW’S DIGITAL CHALLENGES?

By Steve Georgiou, Business Consultant at Xpedition 

 

Charities are under constant scrutiny for how they handle their finances. Budgets are often squeezed and as a result, it can be hard to justify spending on mediums such as new technology, which aren’t always seen as “necessities.”

And yet, there’s a new generation of workers waiting in the wings who have grown up using technology in all aspects of life.  There are also 57% of charity employees who believe the sectors’ development is being hindered by lack of embracing new technology. For those that are willing, a digital strategy has never been more important for a charity’s future outlook.

 

The Next Generation

Many organisations are not prioritising the technological expectations of today’s younger generation. -. Everything outside of the workplace for the upcoming generation is already technology-driven, including the skills they’re learning right now. It’s already disrupting industries and career plans, and by the time this generation steps into employment, the way we live and work will have become even more advanced.

Competition in the Third Sector has always been on the up. Donation methods have changed, securing funds has never been more competitive, reporting is now a lot more stringent, and the next generation of employees have defined efficient methods of ensuring the organisation they are employed by is not left behind.

For charities that are using legacy financial systems that are often old, outdated and costly to maintain, if they do not take the steps now to digitally transform, they’ll fall further behind. Good governance dictates Charities should be investing in modern technology to support the organisation in both its medium- and long-term digital strategy. Ultimately, Charities want to engage stakeholders and employees, simplify processes, streamline efficiency and guide change – but they cannot do this without investing in modern technology to enable change in this fast-moving digital world we live in.

 

A Digital Future 

In times gone by, financial systems were predominantly used to support the back-office finance function. This has all changed. With advances in technology, such as the latest all-in-one financial management solutions, there are now tangible benefits that add value to the whole organisation.

These tools can strengthen decision making, reduce administration time and provide real-time, accurate reporting, all of which are valuable assets for tomorrow’s demands.

There is a real case to be made for a fully digital third sector using financial technology one which thrives and gives not-for-profits huge benefits:

 

Data Management and Analysis

The contemporary digital landscape is all about big and beautiful data. Job roles are evolving to cater for the data boom, organisations are now hiring increasing numbers of Data Analysts and Business Analysts. And one of the most significant benefits that the third sector can expect to see by taking on digital methods is greater data transparency.

The world’s most valuable resource is no longer oil, but data. Data is being transformed into a core asset, one which is being used to tackle charity-wide challenges. Daily admin duties such as data analysis and entry are being taken over more and more by financial management solutions.  This not only removes the need for online time-heavy tedious tasks, but also reduces the number of different sources people have to use to find and analyse data.

Whether it is finance, fundraising, HR or anything else, the efforts of the organisation should be in the analysis of the data to make better informed decisions in the best interests of the charity.

 

Use Cloud to Reduce TCO 

The resistance to change and the associated investment have been barriers to digital transformation for charities. Every organisation wants to achieve greater efficiency and free-up further funding for their frontline

Activities, such as maintaining hardware and the disruption of upgrading are all a thing of the past.

From maintenance to mobility, cloud computing can help you to significantly reduce the Total Cost of Ownership (TCO). With the cloud, there is no need for onsite hardware or expensive upgrades – you are simply sent a URL for storage. This offers you the flexibility to scale your data storage capacity depending on your needs at the time, avoiding the need for expensive hardware. This on-demand, “pay as you grow” approach avoids hedging your bets on unnecessary data storage. The cloud also has greater mobility, allowing for remote workers to access communications from anywhere, with no further technology needed. Backup and restore can be initiated from any location, using multiple devices, and does not need maintenance – reducing the need for a dedicated IT person.

 

Consider Digital, before your Charity becomes marginalised.

With a new generation of workers waiting in the wings, and financial management technology that has the power to provide value for all aspects of the organisation, a digital strategy has never been more important for a charity’s financial efforts. They will not settle for a business that is stuck a decade behind due to not embracing change.

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Technology

COUNTING THE COST OF SILENT CYBER

– Akber Datoo, Founding Partner, D2 Legal Technology

 

Damaged reputation. Financial loss. Punitive capital adequacy provision. Silent cyber is one of the biggest issues facing the insurance industry. Yet despite the Prudential Regulatory Authority’s (PRA) demands for robust action plans, few firms have put in place the document digitisation required to truly understand the level of risk. Further, it is somewhat ironic that an industry that is predicated on pricing risk, is failing to assess and understand this risk that exists today in its back catalogue. From determining the current silent cyber position to identifying policy wording changes and analysing the legacy book, Akber Datoo, Founding Partner, D2 Legal Technology, highlights the need to digitise policy documents.

 

Non Affirmative Loss

“Silent Cyber” is the term given to cyber related losses that may/or may not fall under a traditional property and liability policies that were not designed for that purpose.

The concerns of silent cyber have recently come to the fore and the shock waves created by the Mondelez / Zurich Insurance case have reverberated around the market. Whilst publicity may have temporarily abated over the past few months, very few insurance companies have begun to truly address the risk posed by silent cyber. In an industry predicated on strong reputation, the decision by Zurich to reject a claim from a client whose business had been devastated by the NotPetya cyber-attack in 2017 made headlines around the world – not least for citing exclusion for ‘hostile or warlike action in time of peace or war’ by a ’government or sovereign power’.

Yet as the cost of such attacks are being counted, the impact of silent cyber on the industry as a whole is becoming painfully apparent. PCS Global Cyber has recently attributed 90% of the insurance industry’s losses relating to the NotPetya cyber-attack to non-affirmative (silent) cyber, and the rest to affirmative losses.

Certainly, the PRA believes the UK insurance industry can do more to ensure the effective management of affirmative and non-affirmative cyber risk exposures. It has ordered firms to develop an action plan, with clear milestones and dates by which action will be taken.

 

Divergent Attitudes

Despite the cost to the industry, there remains a concerning lack of consistency in terms of risk awareness and planning as well as risk appetite and understanding. The PRA’s own survey in 2018 revealed significant divergence in firms’ views of the potential exposure to silent cyber. Within Marine, Aviation and Transport (MAT), Property and Miscellaneous lines, exposure was rated at anywhere between zero and the full limits.

With PCS Global Cyber believing the cost to the industry of NotPetya associated claims has now exceeded $3 billion, there is ever greater focus on insurance companies’ cyber stress tests. Fears that gross losses could run into the multiples of annual cyber premiums are very real. However, to date such exercises are based on minimal fact: firms lack robust or reliable claims data relating to silent cyber. As a result, models are immature and there is little faith in the resultant capital adequacy calculations. Just how much capital should the regulator demand firms to set aside against possible exposures when the silent cyber risk is so poorly understood?

In addition to the model and assessment demanded by the PRA, firms need to look closely at existing policy documentation to gain better insight into risk. What is the current position? Does wording need to be amended to address silent cyber risk? How can the legacy book be analysed and key data and wording from the contracts extracted to assess the potential silent cyber exposure going forward?

 

Document Digitisation

In many ways, the insurance industry is better placed than many for the challenges ahead. Document digitisation has been on the agenda for some time and the industry has already created clause libraries to make it easier for firms to gain access to vetted policy wordings and regularly used clauses. However, the low take-up of these libraries is disappointing. Not only do firms have a somewhat confusing choice – between the Lloyd’s Wording Repository, the IUA (International Underwriting Association) Clauses Document Library and the Xchanging Model Wordings Library, but the checklist structure is not providing the required solution.

Insurance companies and brokers need to better understand how to use these clause libraries within current business models, preferably in tandem with a document generation tool to improve data management. The goal is to create data driven contracts, where documents are drafted based on known outlooks. But to get to that point, firms need to actively embrace document digitisation to gain a better handle over the current risk position and create a foundation for rapidly changing wording to avoid any ambiguity regarding silent cyber. Moreover, we need the link wordings in clause libraries to classified business outcomes, and then derive business intelligence from policy portfolios.

 

Conclusion

No firm wants to risk the reputational damage associated with refusing a high profile claim – nor endure the huge losses associated with attacks such as NotPetya. With the rise in cyber attacks, this is an issue that has to be addressed immediately: firms need to act now and embrace the opportunity of digitisation strategies within policy documentation to mitigate the potentially devastating silent cyber risk.

 

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