Risk Awareness and Assessment

01 March 2015

Good risk management is not being risk averse, but being risk aware. over the past fifty years, risk Management has grown from its roots as a way to reduce the cost of insurance to an all pervading aspect of modern business. Many notable corporate failures and catastrophic impacts have been attributed to poor risk management.

Risk Identification
Incidents resulting in loss, business interruption, reputational damage or financial impact will occur at any point during the course of a year for most organizations. Such events range in severity and frequency. While nothing is predictable with 100% accuracy, an organization identifying, assessing and considering risk proactively can minimize loss and maintain operating environments to ensure continued successes with goals and objective being met. Risk identification and assessment is often viewed as the foundation of an effective risk management program. Awareness of potential risks can help reduce the likelihood, and minimize the impact, of unwanted or unforeseen events.

The identification of key risks through a proactive “managed risks” methodology can also support on-going insurance placements. Insurers will compete for the business of customers who show demonstrable due diligence towards yearover-year improvements to the organization’s risk profile.

In addition to expert insurance strategies, an impactful risk management program can include any combination of the following:

  • Risk mapping allowing for risk prioritization, supported by clear internal risk ownership and/or nontraditional mechanisms for management of the identified risk.
  • A deeper understanding of risk causation as a sound basis for improving loss control planning and internal education or training around risk.
  • Consolidated claims data helping to increase the focus around risk mitigation.
  • Communication around key or emerging risks helping to establish an internal risk culture driving awareness – and associated improvement – from within.

Next Steps
When an organization’s risk implications are better understood – often in conjunction with a top down culture shift – resultant impacts can be managed to acceptable levels through prudent risk management.

By appropriately prioritizing risk against the stated goals & objectives of your organization, holistic risk management is achievable by balancing the available mechanisms of transfer, management, mitigation or avoidance.

Managing overall risk expenditures as an asset of the business – including insurance – can reduce an organization’s Total Cost of Risk (TCOR) while matching the risk profile with an appropriately designed risk program.

Any combination of these complimentary program enhancements, in collaboration with a more consultative approach to risk, can help to ensure key stakeholders are well informed of proactive measures to manage risk while ensuring TCOR reductions are achievable over time. And the confidence and support of all stakeholders is essential to enable the organization to make the right risk taking decisions necessary to meeting its objectives- for both survival and growth.

Be Risk Aware, not Risk Averse!