What is it and why do I care?
Part Two
Why do I care about TCoR?
The answer is, “why not?!” All of the costs that I have discussed above are bottom line costs. By tracking TCoR and designing a customized strategy to control these costs, savings can be realized on the bottom line. That means every dollar saved is a dollar of improvement in profit.
Now what can I do with this information?
Okay, now that you have tracked all these costs for at least the last two years, what’s next? As a Risk Manager, I would go through each of the strategies that the business has in place to address each component. We would discuss how effective they have been and what we should do to improve them. For example, if you are having slips & falls, spending more on safety may reduce your overall costs. My point is a dollar saved is easier than a dollar earned. These dollars are found money! Take advantage! Engage a Risk Professional (not an insurance broker) to help you unlock the hidden dollars in your income statement. I can not stress enough that any risk management program that does not look at the Total Cost of Risk (TCoR) is missing opportunities.
