The vagaries of international financial markets, and the unpredictability of Mother Nature, require large organisations to be covered by suitable corporate insurance programmes. But they’re complex and costly, and you may need specialist support.

For many large organisations, risk-management programmes come at a very high cost. And in many cases, while each individual programme component may appear reasonably efficient and cost-effective, adding them all together can reveal sub-optimal structures when projected over 3 to 5 years.

That’s why clients are increasingly evaluating their risk-transfer and insurance decisions as part of an overall capital-management and business-planning framework. This makes great sense from the financial, commercial and regulatory perspectives, and often results in an independent enterprise risk-management assessment. We believe that regular, sophisticated reviews of enterprise-wide risk exposures are essential – and that’s where our experienced specialists can help.

What’s involved with total-cost-of-risk analysis?

We can look at the size of all of your risks, and how they’re being addressed internally as well as through insurance. For example, what might be the impact of losing a key person, and what does your HR function need to do about that risk? Are you dependent on just one supplier, without which you could no longer manufacture and/or sell a key product, and what does your supply chain function need to do about it?

As part of the analysis process, we’ll overlay how an insurance programme can support your overall risk-management structure. For example, we’ll review or consider:

  • your risk-retention levels; which risks are acceptable? What can’t be insured? Where do you have exposures? How can you mitigate your risks?
  • your use/potential use of risk-financing instruments (for example, captives, mutuals, capital markets)
  • the efficiency and security of commercial insurance-market placements
  • the level of capital required to support your overall risk-management programme.

The benefits of total-cost-of-risk analysis

A full, top-down total-cost-of-risk analysis can result in:

  • premium savings following restructuring
  • faster recovery and enhanced business continuity after an adverse event
  • spotting risks which might otherwise be uninsured
  • competition between capacity-providers and sourcing alternative providers
  • more effective use of retention capacity
  • more effective use of overall group premium spend
  • a full understanding of the level of risk retained, including counterparty risk and any associated volatility or capital exposure introduced
  • more sophisticated assessments of the product during insurance renewals
  • a more effective internal risk committee
  • better risk-reporting where this is a regulatory requirement.

Please get in touch

We welcome exploratory conversations about total-cost-of-risk analysis, so why not give us a call? Our key contacts are listed below.

View our glossary of insurance terms

Total Cost of Risk Analysis Key Contacts