May 11, 2004 by Canadian Underwriter
In light of the shift in risk management focus away from insurance-buying and toward loss control, risk managers need to look at their own role within the corporation, according to a survey by the Risk & Insurance Management Society (RIMS) and Marsh.
The “Excellence in Risk Management” study highlights three paths risk managers can follow within their organizations. The first is the role of insurance administrator and claims managers, although this can be expanded to the role of “hazard and operation risk manager”, including the full scope of authority to identify, mitigate and retain or transfer risks. The last is that of “strategic player”, a risk manager who builds relationships with other corporate departments and participates in broad policy and strategy development.
This relationship-building phase has become ever more crucial for risk managers, with the study concluding risk managers should consider rotating through business units to develop insight on all corporate functions. Risk managers also need to develop a firm foundation in corporate finance as the functions of insurance converge with the finance, tax, investment and accounting activities of the corporation. Finally, risk managers need to leverage technology and corporate information for added efficiency.
Organizations, for their part, should be looking at the viability of a risk management committee, at elevating the reporting role of risk managers. Moreover, organizations need to continually assess their own level of risk tolerance and whether more aggressive risk retention strategies could be considered.
The full report can be found at www.rims.org.