Property and Liability Consulting Services                                                            Back to Top

A Risk Management Overview

Risk Management involves the implementation of a program to identify and manage an organization's property, liability, income, and human resources exposures to accidental or unforeseen loss. These duties may be centralized around a risk manager, or spread out among various other individuals or departments.

Risk Control techniques are used to either avoid, reduce, or prevent losses. Many risk exposures are unavoidable, but can still be managed to reduce the severity and frequency of loss. An example may involve the installation of a sprinkler system to reduce the effects of a fire.

Risk Financing techniques are used to react to the financial obligations imposed by a loss. This may include the use of insurance, various types of retention, non insurance contractual transfers, or (more commonly) a combination of all of these.

Why use an Independent Risk Management Consultant?  Common problems associated with risk management programs may include: lack of a definite structure; inadequate insurance coverage; cost containment; difficulties in working with the current agent, broker, actuary, or TPA; a lack of knowledge about insurance; or a lack of staff to serve your needs. Many companies have found that out-sourcing risk management can be more cost efficient than having a full-time risk manager on staff. Commercial Risk Consultants can also provide "by project" to more specifically meet an organization's needs.

The Process 
1. Identify.
The first step is to perform a Risk Assessment. This allows CRC to become familiar with an organization and its attitudes towards risk management. This may involve a complete review of financial statements, contractual agreements, various property listings, loss history, and past insurance policies; interviews with department heads; and site visits. The purpose of this extensive process is to identify the organization's principal risk exposures, and the techniques currently in place to control and finance them.
2. Evaluate. Once the risk exposures have been identified, they will be quantified by levels of frequency and severity of loss. It is important to understand the potential financial impact of each exposure in order to determine the best ways to manage it. Frequency refers to how often a loss occurs, and severity refers to how expensive one individual loss could be.
3. Implement. The feasibility of implementing various types of risk management techniques will then be examined based upon the nature of the loss exposures and the organization's ability and willingness to retain loss. The best combination of risk control and risk financing techniques for the organization will then be selected and implemented. If insurance is utilized, CRC will prepare the specifications, receive and review proposals, negotiate terms and conditions with prospective insurers, and make recommendations for coverage.
4. Monitor. The final and often most important step in the risk management process is to monitor the program. Is it performing as it should? Have the operations, personnel, and property holdings of the organization changed? Has the law changed? Has the insurance market changed? These items can have a significant impact on the effectiveness of a risk management program.

Other Consulting Services
Policy Audits - involve a review of the actual insurance policies with the specifications for accuracy.
Insurance Summary - a report which summarizes an organization's insurance program in layman's terms. Reports can be tailored to include the data which the client wants to have presented.
Budget Projections - are provided based upon changes in the client's operation, personnel, assets, and loss experience; changes in insurance related laws; and changes in the insurance marketplace.
Claims Resolution Assistance - is provided when the client is having difficulty resolving larger claims with its insurance carrier.
Specifications for TPA or Actuarial Services - can be developed for organizations with larger, self-funded risk management programs. Proposals would be received from actuarial firms and third party administrators, negotiations would commence, and CRC would then make a recommendation for the award of the contract necessary to initiate the program.
Retrospective (retro) Insurance Program Reconciliation - involve premium payments or credits based upon insured losses which occurred in prior years. Substantial sums of money are often at stake in this process.
Claims Analysis Reports - can be created using color charts to illustrate the historical loss experience of an organization. These reports typically show either the effectiveness of the overall program, or specific areas where improvement is needed.
Review of Contracts - Liability is frequently transferred or assumed contractually by organizations. CRC can review these contracts to clarify the existence or extent of this liability as it relates to the scope of the current property / liability insurance program.
Certificate of Insurance Management - Certificate of insurance are often requested from contractors as proof of insurance. CRC can establish a policy for your organization to require proof of certain types of insurance from contractors before any type of work commences. CRC will review these certificates when received for adequacy and acceptability. Training can also be provided enabling the client to perform this task in-house.
General Risk Management Consulting - There is often daily correspondence with clients concerning risk management related issues or concerns. Questions can be answered concerning the implications of certain activities undertaken by the client.
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For more information contact John W. Newby in Hampton, Virginia at 757 964 7332 or use our Contact Form