All businesses should take risk management seriously. Businesses that have a detailed understanding of the key risk exposures that their organisation face and that are able to demonstrate a plan for management of these risks, see real benefits; bringing organisational change, significant risk management improvements, lower premium costs and an improved reputation in the marketplace.
When considering insurance and risk management requirements it is crucial that a clear process is followed. Decisions on risk management and risk transfer options can only be effective if considered after a full understanding of a company's risk has been achieved.
Insurance design should be a tailored solution to align with the company's Specific risk profile.  Procuring insurance through generic products can lead to needless expenditure, inappropriate coverage or potentially disastrous underinsurance. A detailed understanding of key risk exposure and control will assist in the design of the most appropriate risk transfer mechanism and insurance program. This staged process would also form the basis of the marketing presentations to prospective insurance markets.
The identification of risks faced by a business across its assets, liabilities, people, finance, suppliers, and customers enables the production of a risk register, forming part of a company's corporate governance.
The quantification of individual risks contained in a risk register will assist in assessing a company's financial liabilities in the event of various loss scenarios.  Once the register is established, management and transfer strategies on the exposures to the business can be investigated.
Management of potential loss scenarios is a key function of `risk management'. The ability to transfer risk to another party can be highly attractive to a company, particularly to those high-risk exposures that could negatively affect the revenue or profit margins.  Insurance is the most common form of risk transfer where contractual responsibilities cannot be passed through to another party by contractual terms and conditions.

Identification

Some of the processes to identify risks faced by a business across its assets, liabilities, people, finance, suppliers and customers include:

RISK PROFILING            

The completion of a Risk Register detailing those risks associated with the project or operating company including damage to assets, capital loss, business continuity, fixed costs, liabilities, people risk, loss of supply and/or customers.

ENGINEERING SURVEYS

An independent onsite engineering survey to produce a detailed report of operations and list of recommendations to prevent loss.

PROCESS FLOW STUDY

Complete a review of the process flow of the operations, producing a study into the risks associated with high production reliability areas.

COUNTRY RISK REVIEW

Assessing the risks associated with Government confiscation, nationalisation, appropriation, currency and convertibility, contract administration, strikes, riots, civil commotion, terrorism, taxation, employment practices and law.

ENVIRONMENTAL & SOCIAL REVIEW

Identifying potential environmental and social risks which may impact business operations or growth opportunities including compliance and reputational risk and those issues that may affect the social license to operate.

HEALTH & SAFETY AUDIT

Conducting a health and safety risk assessment identifying gaps in the systems, processes and procedures including emergency response to meet legal compliance.

Quantification

Methods to quantify individual risks and financial liabilities in the event of various loss scenarios include:

LOSS MODELLING

Production of a detailed financial model across both material loss and business interruption following various loss scenarios.

VALUATIONS

Asset values incorporating independent auditing and quantification for compliance areas such as insurance, financial reporting and transactional dealings.

WORKPLACE INJURY PROFILING

ls a comprehensive analysis of current and historical workers compensation claims to develop a profile of the demographics and causative factors leading to employee injuries.

BUSINESS INTERRUPTION REVIEW

Review of financials to quantify financial exposure to the business across loss of production and periods of loss following an interruption to the business due to an unexpected event.

COMMERCIAL EXPOSURE STUDY

Examines the cost of agreements requiring take or pay considerations and other contractual financial Obligations.

Management

Mechanisms to manage risks that have been identified and quantified include:

PROPERTY LOSS CONTROL

Assists in a strategy of risk control measures to protect against property damage.  Utilising the Engineering Surveys or Business Interruption reviews focus on control and reduction of the higher risk areas to reduce the prospect of damage or loss.

CONTRACTOR MANAGEMENT SYSTEM

Assists in the design or solutions to contractor management that helps create a safe and sustainable services supply chain.

CONTRACT CLAUSES DESIGN

Appropriate indemnity and insurance clauses in contracts make clear who is responsible in the event of an incident or loss. Clearly defining the intention of where this responsibility sits is crucial to provide clear delineation of risk and avoid confusion and costly litigation.

HEALTH & SAFETY MANAGEMENT

The design or improvement of HSE management systems in order to meet required mandatory standards and mitigate identified gaps highlighted in the H&S audit.

ENVIRONMENTAL & SOCIAL MANAGEMENT

Implementation of a dedicated environmental and social management system that links to a HSE programme.

CRITICAL SPARES AUDIT

Understanding the critical spares requirements of the business to meet the exposures highlighted in the engineering surveys.

BUSINESS CONTINUITY PLANNING

Production of a formal action plan in the event of a major incident, including disaster recovery plans.
 

Transfer

Insurance is the most common form of risk transfer, however the risk exposures that could negatively affect the revenue, profit margins or balance sheet can be addressed through:

CONTRACT REVIEW AND NEGOTIATION

The provision of advice on the treatment of all indemnity, liability, consequential loss, insurable obligations and other similar provisions contained in contracts. This will assist in the avoidance of contracting beyond insurance coverages and wherever possible push responsibility to other parties.

SELF RETENTION MODELLING

Provides assistance in selection of excess and deductible levels on statistical and historical data.

CAPTIVE DESIGN

The completion of a captive feasibility study, providing short and long term cost benefits. Details of the captive structure, capital and operational costs, corporate and management control would also be completed.

INSURANCE PROGRAM DESIGN

By utilising the identification, quantification and management data, an insurance program can be designed to fit the unique Risk Profile of each and every company. The information could also be used to produce a specific risk prospectus which will be used to promote the positive features of a clients’ profile.