Risk Management Consulting
My job is to help my clients do their jobs better. The job of Risk Manager has developed from one of “Insurance Buyer” or even “Insurance Clerk” to one of a highly complex “Chief Risk Officer”. What was an appropriate assignment for a risk management consultant five, ten or twenty years ago is less appropriate today.
Today’s “best in class” risk managers understand finance, law and business. They understand the business of their employer better than ever. Most of the “best in class” risk managers spend the majority of their time helping their clients, mostly managers of operating companies or departments, to succeed in doing a better job with their counterparties, be they vendors, customers, or joint-venture partners. They do the best job they can to protect the assets and cash flow stream of their employer without adversely affecting the operations that provide those funds.
Today’s “best in class” risk manager spends a very minor part of their time tweaking their insurance programs. They have gone beyond that stage. They spend time operating within the “retained risk” area and direct the process in which their employer assumes risk associated with their business model.
In dealing with their insurance programs, they spend up to 25% of their time dealing with their brokers or vendors, their insurance carriers and various claims professionals representing them or adverse parties.
The risk management position fits into the organization as a direct report to the CFO, Treasurer or General Counsel, depending upon the make up of the firm’s cost of risk. Finance is preferred where the cost of risk is most heavily weighted toward insurance and administration. General Counsel is preferred when self-insured claims are supervised by in-house legal staff and have frequently litigated outcomes.
The “best in class” risk manager has a relationship with the CEO and meets periodically with the Board of Directors. The risk manager is respected for his or her knowledge, experience and ability to assist the organization in accomplishing its major goals while protecting assets, income stream and employees.
How does a risk management consultant add value to such an operation? Primarily by helping the risk manager solve problems that are beyond his or her level of direct experience and by taking on tasks requiring time that the risk manager does not have available.
Such tasks or projects may include developing ways to enhance the effectiveness of insurance brokers or agents, insurance carriers, third party claims administrators or other outside vendors. They may include developing communication tools that will enhance the ability of the risk management department to assist the operating companies or departments. They may include projects designed to provide an independent appraisal of key catastrophic exposures to loss. And they may involve analysis of certain significant legal exposures that could be difficult to absorb without a negative impact on corporate earnings.
In each case, the right consultant can bring additional experience and problem solving ability lacking in the core risk management team. The consultant can augment the talents and experience of the core team, making their contribution to the success of the overall venture even more effective.
Risk management continues to be a highly complex activity. The right consultant understands who his or her client is and what they need to accomplish. They don’t lose sight of the fact that the project or task assigned to them continues to be the responsibility of the risk management department. The consultant succeeds by helping the retaining firm and its staff to succeed.
We look forward to hearing about your needs and how we can assist you in satisfying them.