Five things risk managers can do to show how they add value
Industry heads discussed how risk managers could demonstrate the value that they deliver to their boards, at the AIRMIC conference in Bournemouth.
With the economic climate taking its toll across industry at large, a significant number of risk management positions have either been made redundant, heard the delegates.
Garry Taylor, head of Global Risk Property at Lockton International and Ian Canham of IC Advisory cited five key things that risk managers can do to clearly demonstrate the value of the role:
• Understanding the strategy – of the business for which they work and the stakeholders’ objectives.
• Quantifying the financial value – so that there is cost certainty around the programme and the amount spent is the same as, or less than, that spent by your peer group.
• Knowing your insurers – at all layers and in detail. Also knowledge of who might offer alternative cover if an insurer comes off your programme.
• Explaining the total cost of risk – from the essentials such as premiums and brokerage to the more complex issues such as ART and enterprise risk.
• Professional interaction –risk managers have dealings with a wide group of stakeholders and need to ensure that colleagues buy in to the process.
‘Insurers clearly understand the value of the risk management function’ Taylor told a workshop. ‘We undertook a sample of opinion in the London market and 83% of the underwriters said that if a company has a risk management function it favourably influences the pricing, and all of them said that a professional risk manager adds demonstrable value to insurance placement.’
He added: ‘However, the recession is taking its toll and assuming that management know and understand the value of the role would be complacent. Our job is help the risks managers survive the recession.’