Numbers can be a risk manager’s best friend when explaining risk to the C-suite, but only when the story behind the data is communicated clearly.

To many risk managers, this is a familiar scenario: Once or twice a year, they present risk mitigation strategies and updates to the C-suite. As the property insurance market has firmed, bringing increased pricing, reduced capacity and tighter terms and conditions, those meetings have often been difficult.

That’s where numbers come in. The access and use of better data, analytics and benchmarking is critical for risk managers to understand their organization’s risk exposure. This information can inform decisions about whether the business is adequately insured, where it can take on more risk and where it could make use of alternative risk-financing structures or other innovative solutions.

Good industry information on rates and capacity availability can tell an unbiased story of the general marketplace and create a baseline, allowing risk managers and executives to approach the property insurance market in more strategic ways. It also strips emotion from conversations, helping risk managers focus on market forces and specific risk variables.

At the same time, risk managers must be mindful of what data to use when explaining their risk story — including their organization’s own loss experience — which can paint a picture of what the business has done to mitigate risk and lessen rate impact. While some numbers speak for themselves, others can be misleading if they aren’t accompanied by some context as to what they show. Use these four recommendations to your advantage to better understand the power of metrics:

Understand the Value of Impartial Comparisons

It’s extremely beneficial to benchmark yourself against your industry peers when trying to determine optimal limits and retention and deductible levels. If your company’s insurance rate is lower than your peers, you can explain to the C-suite the steps you’ve taken to control losses and retain a better rate than your competitors. Conversely, if you’re paying more than the industry average, those metrics could indicate the need to introduce new alternative risk-financing vehicles into the mix — such as captives, parametric insurance or a different retention strategy. A strong broker can provide industry data comparisons that can help you position your company among your peers.

Knowing how you stack up against competitors could influence your rates. The proactive next move, then, is to figure out how to differentiate your individual risk so that you get to the better side of the industry average.

Choose Metrics That Are Pertinent to Your Business

A plethora of metrics are available, but it’s important to be strategic about what you use and how you use it. That’s because the data presented to the C-suite must be focused on the real drivers of your business and on its risk management strategy. Take location, for instance. If you’re an Iowa-based company, metrics on hurricane risk won’t be relevant to your narrative. Similarly, rates, retention, deductibles, placement specifics and other factors must be viewed through the lens of your risk history. If you have all your insurance through one carrier or have significant loss experience, the metrics pertinent to you will be completely different from those of a firm with shared or layered insurance or little to no loss experience.

Focus on What’s Important to Executives

So much of making metrics matter comes down to understanding the motivations of the C-suite. CFOs may have certain metrics that they’re used to or that mattered in an industry in which they have previous experience. Knowing this will help you understand how much of your narrative around metrics needs to focus on education and breaking down potential preconceived notions of which numbers matter.

Similarly, understanding the hot-button issues for the C-suite will help you choose which metrics to highlight. If your firm just acquired facilities in California, for example, it’s important to understand the earthquake exposure of those facilities and the options to mitigate that risk in the traditional or alternative markets. The better you can anticipate the concerns of executives, know your organization’s risk profile, and provide ways to build risk resilience, problem-solve or recognize overall organizational concerns, the more impactful your narrative will be.

Approaching metrics from this strategic standpoint will also create the chance for a follow-up opportunity with executives and shift the conversation from reducing insurance costs to mitigating and transferring risk to help the overall business operate more efficiently.

Know the Ideal Data May Not Be Available at First

While the data and analytics capabilities of companies and insurers are improving every day, work remains to enhance metric reporting. Some organizations may not have the information needed to perform proper data analytics. Other firms may have that information, but risk managers may not know where it lives or how to extract insights. That’s why risk managers should work with their brokers to lay out a long term road map for metrics, often developing over several years. Over time, as the data collected become more robust, the analytics capabilities and models used will be tweaked and refined.

The sooner you can get the C-suite on board with such an approach, the more effective — and successful — your property insurance metrics journey will be.