Is it time to challenge the “status quo” in your risk management program?

The cost of insurance is rising while available capacity is shrinking simultaneously. Insurance and re-insurance intermediaries are documenting these increases through various market insights and publications in an attempt to ensure that their clients are well informed.  

While this is helpful in some cases, when challenged by stakeholders or management on the rapidly increasing cost of risk, simply “taking your intermediary’s word for it” or “my fellow peers tell me the same thing” will most likely no longer be adequate answers.

 Furthermore, it may be prudent to ask yourself the following questions: 

• Can we certify that our top 10 risks have been identified, evaluated, and that detailed risk treatment strategies are in place for each of these risks (i.e. avoidance, mitigation, control, insurance/transfer, or retention)? 
• In order of priority, which of these risks require the most attention, time, and available resources? 
• Have we been presented with different risk treatment alternatives, structures, and/or solutions for us to evaluate?  

With respect to the insurable risks: 

• Is the design of our insurance program in line with our risk tolerance/philosophy? 
• How specialized is our insurance intermediary, and are we deriving the maximum possible value out of this relationship? 
• Do we have full transparency into the compensation structure of our insurance and/or re-insurance intermediary across all the purchasing channels?  
• How does our insurance program elements and the cost stack against some of our peers similar in size and/or industry? 

If you’re challenged by any of the above questions, it may be time for your organization to consider an enterprise risk and insurance assessment by an independent third party organization.  

Similar to how most organizations have their financial statements audited by an auditor, an enterprise risk assessment can help you “vet” your program and answer all of the above questions by reviewing the process that your organization currently uses to manage enterprise risk. In addition to providing answers, an enterprise risk assessment can provide the following additional benefits: 

• Reduced liability for the Stakeholders, Management, and Board of Directors 
• Recommendation of alternatives for existing risks that are not adequately addressed 
• Increased confidence in the protection of the continuity of the organization  
• Assurance that insurance policies are designed to respond to constantly changing exposures and tightening regulatory landscape 

For more information on this topic, or if you have any questions, please feel free to contact us at: pmarchena@riskversity.com