What is your corporate strategy for Risk Management?

Does your company have a comprehensive strategy for defining and managing risk? Who is managing that strategy?


With the fall of Lehman Brothers and all of the economic disasters of the last 3 years, 2008 is viewed as the year that the banks fell apart. However, 2008 should also be remembered as the year when the true value of risk management became evident. A complete risk management strategy takes into account all the factors that present risk to a company-
1) Resources
 2) People
 3) Business continuity

Questions concerning how your company defines risk:

---What risks are you willing to accept as a company?
     Your philosophy should be based on the views expressed by your executive team regarding the role of risk management within the company. Things to consider are the type and extent of risk analysis performed, and how much risk your company is willing and able to take on. And because risk is ever-changing within an organization, it requires a clear and constant line of communication between you and your executive team.

---How will you manage the risks you don’t want to retain?
     After you know what your risks are, you need to decide if you’re going to retain, transfer, mitigate or eliminate them. So how do you make those decisions? The best method is to perform a thorough cost/benefit analysis. For example, which risks can you eliminate altogether by discontinuing a product, changing a location, or choosing a new supplier? Can you provide safety training to employees that will help mitigate another risk? Also, insurance is a critical tool when you choose to transfer risk. Compare this information against the identified risk, and that will allow you to develop a detailed strategy for risk management.
After you have established your corporate philosophy and have identified your complete list of risks, you will be able to successfully deploy your strategy. The success of your risk management strategy lies not only in developing open lines of communication with your executive leadership and in performing a thorough analysis and review of your exposures, but also in choosing the right partners for the risks you choose to transfer. Through this process, you will implement your risk management strategy in the most effective way.


Bobby Bland PWCA, CIC
Vice President
Commercial Risk Service