We recently posted a blog on the benefits of an organization incorporating a risk committee into their risk mitigation strategy.
As we mentioned, Boards of Directors are becoming more and more focused on the strategic impact risks can have on their company. Your organization’s Senior Management is looking beyond just collecting data, but wants to see analysis and strategy developed that aligns with your company’s strategic goals. This means that evaluating risk must move beyond Total Cost of Risk (TCOR) and using insurance to mitigate it.
A recent article in CFO magazine touches upon the belief that TCoR must move beyond the simple view of using premiums, retained losses, and administrative expense to evaluate risk. Carol Fox of RIMS was quoted as saying that companies that want to strengthen their risk-management capabilities are “looking at what their strategic plans are and how those play into risk scenarios.” Organizations should look at not just the coverages that are in place today, but the processes within their organization that take advantage of the upside of Risk and increase their profitability. To achieve that a company needs to move away from solely looking at the mitigation of risk and instead look for ways risk can help drive their strategic vision.
The ALS Group, an independent risk management and insurance consulting firm, uses TCoR to not only show how to bring down the cost of insurance for our clients, but also to establish processes that increase their profitability. To learn more about TCoR and the way to align it with your company’s strategic goals contact Albert Sica at 732.395.4251 or at [email protected].
