Magazine article Risk Management

As Relevant as Ever

Magazine article Risk Management

As Relevant as Ever

Article excerpt

It has often been said that risk management is far more than simply procuring insurance. Indeed, analyzing risks, loss prevention, loss management, crisis management, business continuity planning, enterprise risk management, alternative risk financing and transfer are all things that can now be done without ever calling upon a single insurance carrier or broker. The days when "insurance buyers" and "risk managers" were synonymous are long gone.

But with that in mind, it would be foolish to pretend that insurance no longer makes up a major portion of the risk management picture. Not every firm has the resources or the willingness to finance their risks themselves, explore the alternative market or devise a risk management strategy with out the help of an industry that has already been doing it for centuries.

Nowadays, both the risk management and property/casualty insurance industries are under immense pressures to evolve or die, and in some ways, both industries are linked in this endeavor. The continuing hard market has caused premiums across the board to skyrocket, forcing risk managers to reconsider nearly all of their existing insurance arrangements. The only ones immune to this are those who renewed into long-term agreements right before the hard market began, but their time is soon coming too.

For many risk managers, the insurance they have come to rely on--especially liability policies of almost every variety--is simply too expensive to afford any longer. Coverages are more restrictively worded, limits are being lowered and capacity in some markets is evaporating faster than ice chips on a hot sidewalk firm after firm is forced to figure out how they can effectively manage their risk without insurance, or with considerably less of it, anyway. One need only look at the booming alternative risk transfer markets to find proof of this. …

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