Transferring risk should be about much more than buying an insurance policy; the assessment of risk appetite and allocation of capital to risk can create valuable upside and significant opportunities to companies. But to do this, companies need to develop the right strategies for financing risk.
It is essential for companies to follow a robust process when determining how to strike the right balance between risk and reward. At Marsh, we believe that companies that follow such a process can realise a number of benefits that can include reducing exposure to the volatility of the insurance market cycle and delivering a sustainable and lower ‘total cost of risk’.
We call this process Risk Transfer Optimisation; it helps companies to create business opportunities by optimising their risk transfer strategy and to evaluate the risks they choose to take, finance and insure.
Have you considered these questions:
Have you assessed your corporate attitude to risk – your risk tolerance?
Do you know whether insurance or your programme structure represents value for money?
Have you reviewed your risk financing strategy in light of your corporate objectives?
Do you use a cost of risk calculation to assess the appropriateness of a risk financing strategy?
Click here for your copy of the Marsh white paper, ‘Optimising return on capital employed on risk transfer’.
Managing your risk