Big Data - Assessing the Potential and Limitation of What you Know

Scientists are spending less time in their labs or looking through their telescopes and more at their desks dragging through data records looking for patterns. And they’re not at all unhappy about it.

It might not sound as exciting an activity, but this is in fact how biologists, physicists and medics, are making many of their most important discoveries, whether finding previously unknown planets or atomic particles, or how the genetic make-up of different cancers affect a cancer patient’s prognosis. The discipline they are engaging with is variously known as data analytics or Big Data and its impact is spreading beyond science into many other areas of life.

Thanks to data analytics, retailers are learning to better understand their customer's needs; manufacturers to optimize their products; banks to create algorithms that detect fraudulent creditcard transactions in real-time; and almost all organizations to improve their processes.

"We are in an era where we have access to data, and access to the technology to evaluate the data. That makes it very tempting to do lots of things, but would they be useful?” says Ron S. Kenett, research professor at the Department of Statistics and Applied Mathematics, University of Turin, and cofounder of Israel-based data analytics company KPA.

“All the things that used to be on paper charts held near a patient’s bed or in paper folders are now held in computer files. That’s a very powerful resource but we are not using it as well as we could.” Uses, he suggests, such as helping doctors to find treatment plans to match exactly a patient’s specific need according to his captured symptoms and treatment.

“Oncologists have hundreds of possible treatments to choose from. They do an amazing job but smart analytics could tap into uncounted past decisions, making better decisions based on past experiences,” says Prof. Kenett.

Understanding the ethical impact is also very important and this varies between cultures, says Prof. Kenett. "Things that are considered an invasion of privacy in one part of the world may be seen as normal elsewhere,” he says. For example, needing to show a passport in order to get a hotel room or taking a photograph with a camera with a silent shutter.

Reinsurance too, could be greatly affected by data analytics. This ability to work across data sets and silos could help us getting early clues to hard-to-predict, high-impact black swan events, so we can dig deeper into these clues and assess their validity.

Having the tools to glean a definitive, accurate overview of your key business drivers is surely the most powerful basis for well-informed decision-making, says Michel Liès, CEO of Swiss Re. "Big Data has the potential to revolutionize the (re)-insurance industry and potentially the economy as a whole.”

"Big Data has the potential to open up new horizons, assessing and pricing risks more accurately. For instance, insurance products can become customized, even individualized," says Mr. Liès.

But he warns, people shouldn't get carried away with the idea that Big Data is a solution to anything and everything. People run the risk of “mistaking data for reality,” says Mr. Liès. “We saw a similar phenomenon before [the financial crash in] 2008 when too many people believed that data-rich models are the reality—and acted accordingly, to their own peril.”

In spite of Big Data, says Mr. Liès, we will still need to make informed judgments understand the limits and assess the risks associated “Connecting the dots, or rather connecting the data, will remain key—in management, in business and in life. This is something that we reinsurers learned over the decades we have been in business.”

In some regards, says Mr. Liès, reinsurers have always been in Big Data. Ever since actuarial science replaced throwing coins at Mr. Lloyd’s café, in fact. “The difference now is speed, connectivity and data variety," says Mr. Liès.

"Actuarial sciences are important, if not critical for us,” says Mr. Liès. "But in the end, what keeps us ahead is the art of underwriting - we need to understand the risk, Big Data can complement but never replace this so precious talent."

If you want to join in the debate at Monte Carlo please join the Presentation Debate hosted by Swiss Re CEO, Michel M Liès.

Click here where you'll find the dates/times for planning purposes.

The Swiss Re team is looking forward to welcoming you to the Big Data debate!

Swiss Re RVS 2014

Published 08 September 2014

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