What’s Your Cost of Risk Management?
Posted on 6th June 2024 at 11:14
Understanding the cost of managing risk is crucial for any business, whether it's calculating injury claims or accounting for losses due to employee theft. Both pure and speculative risks impact the cost of your wholesale or retail risk management program. At BIP Ltd, we adopt a comprehensive total cost of risk approach, customizing your risk management strategy to achieve the ultimate goal: optimizing your costs. Here’s how we help you achieve that:
Analyse Your Exposures
Implement Control Measures
Determine Risk Transfer or Financing Options
Manage Current and Future Exposures
Identifying Exposures
As part of our risk management process, we ensure that your strategy aligns with your overall business objectives. We ask critical questions such as: What concerns keep you up at night? How would unforeseen capital losses or production shutdowns impact your income or cash flow? Understanding these qualitative aspects helps us create a robust strategy aimed at minimizing your risk-related costs.
Exposures can be both qualitative and quantitative. By analyzing both, we lay the groundwork for proactive risk management strategies.
Your Risk Perspective: Is your company risk-averse, or are you financially capable of assuming more risk instead of transferring it to an insurer?
Company History: Start-ups often face tight cash flows, making them more risk-averse to protect their financial health. Established companies might face different risks, such as becoming obsolete or too conservative.
Industry and Market Position: We assess your industry, market position, and competition to tailor a risk management solution that adapts to your evolving business needs.
Quantitative analysis complements our qualitative assessments. We examine hard data and past losses to identify performance trends and key loss drivers:
Average incurred costs per loss
Total incurred trends
Locations with high-frequency issues
Fraudulent behaviors
Reporting lag time
Frequency vs. severity ratios
Our detailed analysis highlights opportunities to address critical areas impacting your total cost of risk. We identify the root causes and implement measures to mitigate these exposures.
Implementing Control Measures
Once we identify your exposures, we focus on the best control measures. Implementing effective risk control strategies is essential for reducing potential losses and safeguarding your business's financial health. Our targeted approach ensures that your resources are directed towards mitigating the most significant risks.
By tailoring our risk management solutions to your specific needs and continuously monitoring your business environment, we help you manage and reduce the total cost of risk, securing a more stable and predictable financial future for your company.
Share this post: