• Blog
  • 4 Min Read
  • August 17, 2015

Is Your Investment Accounting System Managing Risk – or Causing Risk?

Written by:
The Clearwater Team

Risk is fundamental to the insurance industry. By simple definition, an insurer assumes risk for policyholders in return for a premium. That risk is measured, quantified, and monitored throughout the organization in a variety of ways.

Have you ever looked at the tools and processes you use to measure and quantify your investment risk? Do these tools and processes help mitigate your organization’s risk, or add to it?

From an investment risk perspective, CIOs, CFOs, controllers, compliance officers, and investment accounting professionals all play critical roles in monitoring risk. They use a number of tools to monitor investment risk and make strategic decisions based on it. The backbone of these processes is typically the investment accounting and reporting system the organization uses.

Your investment accounting and reporting system should be your primary tool for understanding and managing your investment risk, yet many insurers continue to rely on outdated tools they’ve used for years, and in some cases, decades: installed software and other systems haphazardly patched together, massive spreadsheets with no IT-security or data back-ups, and tedious and error-prone manual data entry. These tools and processes were once valued improvements over paper ledgers and mainframe computer systems, but they haven’t kept up with advancements in technology.

These systems—which should help you manage your investment risk—are actually increasing risk for your organization.

So what does risk look like when it comes to your investment accounting tools?

Operational Risk: Bad Data can Lead to Poor Decisions

The legacy systems of the late-twentieth century rely heavily on manual data entry, which is by definition error-prone. Making investment decisions based on faulty data can lead to unforeseen vulnerabilities. Relying on manual processes also costs you time, and limits your view of your portfolio between month-end close outs.

Employee Risk: Your Talented Employees Aren’t Happy

Outdated accounting processes are tedious, exhausting, and unnecessary. Your smart, driven employees are focused on administrative tasks that could be automated using modern tools that increase data accuracy and streamline processes.

Systems Risk: Outdated Tools Depreciate with Time

Technology is always evolving. Relying on outdated investment and accounting software means managing your crucial investment data with a tool that can’t adapt to new investment mandates, and can’t adjust to incorporate new external regulations or stakeholders. It also places the burden of security with your IT department, which may not be fully prepared to protect your data from ever-evolving software security risks and attacks.

If these risks sound familiar, perhaps it’s time to consider an investment and accounting tool that will help you establish the new industry best practices that many successful insurance investment teams have already adopted.

The Clearwater Solution

Clearwater provides an automated, web-based investment and accounting reporting system, allowing you to establish efficient and scalable accounting processes. By eliminating the need for manual processes, Clearwater mitigates your accounting risk and provides an integrated, modern investment accounting and reporting solution.

With monthly releases, Clearwater proactively anticipates new insurance market-driven needs, and creates solutions to your specific challenges in the form of seamless, automatic software updates throughout the year. Clearwater also makes security a top priority—our business depends on it.

Clearwater streamlines all of the heavy lifting normally associated with investment accounting and reporting, regardless of how many legal entities, portfolios, investment managers, or custody banks are involved. This frees up your talented team to do valuable work.

With Clearwater, your investment and accounting data is automated and reconciled daily. You have confidence that the data informing your strategic investment decisions is accurate. You also have access to this reconciled data whenever you need it, not just at month-end.

Have you considered Clearwater? There’s no risk in learning more.

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