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Organizations of all sizes face a variety of potential risks, from both internal and external sources. Some of these can be anticipated and proactively managed; others cannot. Often, the very organizations that tend not to focus on risk management because of the perceived costs are exactly the ones that need to be more aggressive about it.
For most organizations, addressing the risks that prevent them from succeeding can seem to be an onerous, time-consuming, and costly business. Without the resources available to the largest organizations, the risk management function often fails to address key threats in the most efficient way. This can result in wasted investment and continued exposure to unidentified or unmanaged risks that can, in turn, expose companies to potentially disastrous consequences.
What Will You Say When They Ask What Happened?
While senior managers may think they either cannot afford or do not need to address risk-related issues, the following questions illustrate that risk management needs to be a cornerstone of all organizations’ strategic business plans. For example:
- Do you know your chief risks, and have you prioritized them?
- Do you have contingency plans in place to address sudden, unexpected business disruptions? Do you know what the impact would be to the loyalty of your customer base?
- Does staff absence drain your bottom line? Is your working environment hazardous for employees? Do your management controls effectively spot and tackle workplace stress?
- Are you in compliance with appropriate government regulations? How easy would it be for staff to breach these controls? Do you miss out on opportunities to grow because of inefficient governance practices?
- Does the level of insurance bought by your organization provide adequate protection for its key risks? Does your purchase of insurance reflect fairly on the level of retained risk? Is there an opportunity for you to manage risk another way and reduce insurance costs?
These are just a few of the risk-related questions that organizations must address to meet growth aspirations, comply with government regulations, enhance efficiency, and protect people and assets.
Proactive risk management need not be complex, overly burdensome, and expensive. But senior management must drive it, and in a way that encourages active participation for the long-term. But how should businesses get started? What’s the first step?
Who’s Looking Out for You?
Marsh’s Risk Focus helps organizations identify and allocate meaningful management action around the risks that matter most. It delivers a fast and efficient review of an organization’s risks. It highlights the problem areas that could bring a business to its knees. It enables organizations to maximize insurance and risk management expenditures.
Every Risk Focus project is highly individualized as it uses information specific to an organization's own business objectives and risks. Through a series of short interviews and a workshop, every risk identified by the client is assessed for its likelihood and potential impact, building a picture of risks requiring priority action. The availability and performance of current risk controls is analyzed, and further recommendations are given on risk management tools and insurance.
Risk Focus is based on internationally recognized risk management standards. It is designed for business managers and does not require a detailed theoretical understanding of risk management from those clients actively engaged in the process.
Every client of Risk Focus receives a report based on the outcome of management interviews and an interactive workshop, together with subsequent analysis and recommendations on risk control strategies from Marsh. The report includes:
- A list of the organization's top 20 risks and a review of existing management controls and potential insurance options. This data forms the bedrock upon which management’s time and effort are prioritized going forward.
- Available benchmark data on the relative position of the client against other organizations in its sector. This perspective can generate risk improvement strategies that are in line with the industry.
- A risk action plan. A simple but effective way of making sense of the various options available to manage each risk.
- Advice on strategy for future risk management. This helps keep the process alive by setting medium- to long-term goals.
A Risk Focus exercise brings valuable benefits to clients, including:
- Supporting the achievement of business goals by making management more conscious of the risks that could affect the business, so it can plan accordingly
- Helping to achieve compliance with government regulations and with the expectations of other third parties, such as investors and customers
- Providing opportunities to cut costs by eliminating duplicate processes and recommending specific risk management actions that lead to improved efficiencies
- Delivering a range of potential insurance benefits, including supporting underwriting submissions, identifying alternative ways to manage risks and reduce claims, and considering overall redesign
- Ensuring genuine business ownership from the start: It demystifies the science of risk management by giving it clear business justification
Making risk management work is about identifying and assessing key risks, and having the confidence that existing controls and insurance help to monitor, reduce and manage these risks in a way that provides the maximum payback and no nasty surprises. Risk Focus can serve as the cornerstone to an effective, organization-wide risk management strategy.
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
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