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Outsourced Risk Manager

The BIG Guys

Large organizations often have a risk and insurance management department, overseen by the Risk Manager, who typically reports to the VP Finance or higher position.
What do they do?

The functions of the Risk Manager can include,

  • Identify and measure all exposure of potential loss This would involve management of asset records and analysis of potential losses of income
  • Choose Risk Financing Alternatives to traditional insurance.
  • Develop risk management policy for the company and ensure it’s implementation and monitor it’s effectiveness.
  • Negotiate insurance.
  • Oversee claims settlements.
  • Keep Records.
  • Create and manage a Risk Management Policy Manual.
  • Communicate to management and throughout the company to ensure that company risk policy is being adhered to.
  • Allocate Costs
  • Administer Risk Management Functions such as a) analyze implications of mergers and acquisitions and b) review contracts for risk and insurance implications.
  • Oversee Loss Prevention Activities, such as safety, housekeeping, sprinkler and alarm systems.
  • Keep personally professionally up to date.This is a generic list of functions, but gives you some idea of what this position entails in a large company. Many of the same activities are carried out, or should be, in a smaller company.

    But, smaller companies cannot justify a full time position plus support staff for a Risk & Insurance Management Department.

Now What?

So, what should they do? Now, you can have your own Risk Manager.

Often, these duties are spread around. Sometimes senior management or owners attempt to administer these functions.  Many times they are delegated to staff who are not qualified and the end result is a fragmented and disjointed effort.  Quite simply, important elements are overlooked and simply fall between the cracks.

For example, insurance is not coordinated.  Essential insurance is overlooked, and money wasted on nonessential coverage.

Insurance policies are simply renewed, and not “negotiated”.  Changes in the organization are not taken into account and reflected in the insurance policies.

Operations level staff don’t know what type of activities should trigger an insurance response.

And the Solution is….

a part time Insurance and Risk Manager. This could range anywhere from a few days per week, to a few days per quarter; or you name it.

This concept is known as “Rent-A-Risk Manager” or “Outsourced Risk Manager.

Many consultants act successfully as risk managers for a variety of clients and the Rent-A-Risk-Manager concept is growing.

The advantage of consultants in this role is their expertise and objectivity.

Their major disadvantage is separation from the day-to-day activities of the client.  But, that is still much better then no one at all.