How Drones are Contributing to Hedge Fund Management?

The primary goal of the hedge fund is to maximize investor returns and minimize risk. The major strength of hedge fund management lies in its ability to leverage alternative data for gaining insights. The massive amount of investment and a small number of investors enables the fund managers to invest according to a well-defined investment strategy. Increasingly, hedge fund management is encompassing the latest technologies, such as drones, to increase the scope of alternative data.

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Photo by Austin Distel on Unsplash

According to CNN Business, drones and satellites are increasingly used by the investors to identify the potential trends and scope of investments. For instance, energy companies do not reveal the extent of damage caused to refineries by calamities such as hurricanes. However, hedge fund managers, who have invested in the energy sector, can gather details on such developments with the help of drones, and the data can be used in investment decision-making processes. Another possible use case of drones can be in parking lots. Drones can be used to monitor how busy parking lots are at major retailers. Empty parking lots could indicate poor store traffic offering hedge funds a reason to short a retailer’s stock.

Hedge fund investors can gain a competitive edge with the help of drone technology. The technology can offer key data in advance, thereby enabling the investment firms to adjust their moves accordingly. For instance, an enterprise seeking to gain a competitive edge on a commodity can leverage drone technology to gather data across the supply chain. The drones can be deployed to monitor transportation patterns. Based on the number of transport vehicles, productivity trends can be assessed. Hedge fund investors can use the above information to decide whether to invest or not on that particular commodity.

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Earlier, investment firms had to rely on the manual workforce to gather the above trends. Apart from being incomplete, such human-based assessments also required cost and time. With technologies like drones, investors can gather an enormous amount of data within a short span of time. Drone-generated insights are significantly contributing to the hedge funds and enabling the fund managers to maximize profits.

The insurance industry is keen on adopting drones due to the various benefits such as improved efficiency, safety, faster turnaround time, and reduced costs. With some serious operational challenges and transparency issues impacting the current insurance landscape, drones can play a critical role in the sector. Drones capability can propel swift, data-driven decisions in the industry, especially when it comes to insurance claims. According to a report, drone technology can help the insurance sector to save up to 6.8 billion USD annually. Focusing specifically on claims processing, drones can offset processing costs by up to 75 percent and significantly boost the process of damage assessment.

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Drones can significantly aid the insurers with damage assessments in the properties, thereby contributing to an integral aspect of insurance claims processing. The technology is even more relevant for monitoring property damages as it eliminates the need of the owners to be at home during drone surveillance. Further insurance firms can assess damage faster and more efficiently as there is no need for the insurance personnel to visit the property for manual surveillance. Drones can enhance inspection efficiency by up to 85 percent.

When it comes to fraud detection in insurance, drones offer an additional capability for the insurers. According to a report, fraud comprises over 10 percent of processing and claims losses in insurance. For instance, in the case of agricultural insurances, drones can assess the precise yield as well as cultivable land. Further, a drone can collect data on 500 to 1,000 acres of land within a day, thereby offsetting the time required to settle claims. Similarly, drones can save considerable amounts of money in the automobile sector as well. For instance, drones can be used to perform random inspections of vehicles and other insurance risks, thereby saving time and resources.

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Insurers understand the potential of drones in terms of efficiency as well as transparency in the claims processing and are increasingly adopting the technology for gaining a competitive edge.

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I am a technology blogger, who loves to read and write on the latest in technology.

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