Managing Your Total Cost of Risk

Total Cost of Risk Best Ideas

For manufacturers, you need to ask yourself this question: how do I quantify my true cost of risk? Consider this scenario, if you are faced with a recall, how do you calculate your loss of reputation or market share? These concepts are more abstract and not as concrete as identifying insurance premiums or calculating lost production costs due to downtime. Those of us at Capital Insurance Group take a total cost of risk approach, which means that we take into consideration both pure and speculative risk. Our approach will positively affect your price by protecting these four main asset categories: organization, personal, property, and net income.

Your Total Cost of Risk Management Program

          Our goal is to build a risk management program for you that looks to decrease your total cost of risk. To do this we will assist you with the following: identify your exposures, implement appropriate control measures, determine risk transfers or financing options, and finally, manage current and future exposures.  

Identify Exposures

          A key part of our risk management interview process is to make sure that your program supports your overall business objectives and plans. What’s more, is that we ensure that you are aware of the nature of risk, in that risk can be both qualitative and quantitative.

We will also determine your risk aversion, taking into consideration your company’s age, norms in the manufacturing industry, your market position, and your competition. Furthermore, by analyzing losses, we will identify many important trends in your performance. Our in-depth analysis will reveal opportunities for the implementation of control measures.

Implement Appropriate Control Measures

            An estimated 75% of commercial insurance expenses are claims-driven. Capital Insurance Group has the solutions to reduce this percentage while also delivering a comprehensive employee safety education campaign to address all of your exposures.

            In light of COVID-19, we can help you establish a Return to Work program to positively affect your bottom line. Additionally, our agency can give you the necessary anti-fraud tactics to avoid the cost of risk going out of control.

Determine Risk Transfers or Financing Options

            To address the financing of your risk, there are several questions you should ponder.

  • How much risk can you afford to assume in-house?
  • How can Capital Insurance Group assist in contractually transferring risk to a third party?
  • What portion of your exposures do you want to finance through an insurance policy?

Answering these questions along with considering a combination of insurance and non-insurance strategies can help determine the most suitable approach.

Manage Current and Future Exposures

            It has been estimated that roughly 25% of businesses that have sustained a major catastrophe will no longer remain in business within one year. Our agency has the resources to help you develop a comprehensive business continuity plan. We offer 24/7 web access with tools and support to drive down your cost of regulatory compliance.