Strategic Risk Management is a process designed to keep both the risks associated with doing business and the costs to a minimum. The use of this approach is an indication to insurance underwriters that an organization has performed a thoughtful analysis of the risks involved in doing business. In a tight insurance market, this may maximize the chances of obtaining affordable insurance.

The Role of Risk Control

Brokers and agents have discovered in the past several years that risk control professionals can add significant value to the services provided to their clients. Many large national and regional brokers recognized this fact when it became apparent that risk control professionals were able to fill gaps in service left by insurance carriers. In fact, this gap has widened in recent years with the consolidation of carriers (i.e., St. Paul Insurance Company and Travelers Insurance) or carriers that no longer provide coverage in the United States (i.e., Royal & SunAlliance). These consolidations and departures from the insurance market have impacted the number of risk control professionals offering service to assist clients. The risk control professional, from both the broker and carrier, must develop relationships with clients that are, in effect, extensions of the clients' risk management programs. In order to accomplish this task, professional consultative services are becoming readily available from adequately staffed brokers. The carrier representatives are sometimes limited by the frequency or number of visits that can be economically provided to clients. The broker representative limitation may not be as significant depending on the method used to fund or pay for broker services. Funding is either based on revenue or is fee-based. Although the level of risk control may vary among brokers, from "generalists" to "practice specialists or leaders," each of these professionals bring safety, health, property, products, environmental and a variety of additional areas of expertise. The changing nature of business mandates that each practitioner have as many "tools" in his/her toolbox to do the job at the highest level possible to meet the demands of the client. The primary goal of this paper is to offer a model for risk management service that can enhance the efforts of both the internal and external risk control consultant. This model will impact the safety and health decisions of the client.

Traditional Risk Management Versus Strategic Risk Management

Risk management has been defined as a process that uses physical and human resources to accomplish certain objectives concerning most pure loss exposures. There are both post-loss and pre-loss objectives that must be considered. Post-loss objectives include:

  1. survival,

  2. continuity of operations,

  3. earnings stability,

  4. continued growth, and

  5. good citizenship or social responsibility.

Pre-loss objectives include:

  1. economy,

  2. reduction in anxiety,

  3. meeting externally imposed obligations, and

  4. good citizenship and social responsibility.

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