risk management basic presentation 1233898092195357 2

7/31/2019 Risk Management Basic Presentation 1233898092195357 2

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Finding Hidden Profits Through

TheRisk Management Process

Colin Baird

1113 West Avenue M-4, Suite C

Palmdale, CA 93551Direct Telephone: 661 486-2202

Fax: 661 281-4992

Cell: 661 332-0382

Email: [email protected]

or

[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Colin D. [email protected]

There Are Five Basic Steps

To Risk Management


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Monitoring

Examine and

Evaluate The

Results Of

The Plans

Implement

The Desired

Action and

Plan

Control and

Finance The

Risk

Analyze and

Measure The

Risk

Identify The

Risk

The RiskManagement

Process


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Identify The Risk

The process of Identifying and Examining the Potential Sources of Losses FacedBy The Organization.

Process Based Evaluations Step 1

C Level Executive Meetings To Discuss Commitment To Desired Outcomes Step 2

Facilities and Worksite Evaluations

Risk Checklist and Survey Audits Specific To SIC Classifications

Insurance Policy Analysis

Net Income/Financial Analysis

Compliance Review

Contract Review and Analysis

Policies and Procedures Review (Employment Audits Using Outside Counsel)

Computer Based Risk Modeling To Review Probable Sources and Losses Of Organization

Step 3 Comparison Of Client Losses Against Industry Losses

Step 4 Baseline Comparison Of Limits of Insurance Against Similar Sized Organizations


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A Few Examples ofIdentifying

The Risk Checklists

Insurance Policy Analysis

Physical Inspections

Net Income/Financial Analysis


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Logical Classifications Of Risk

Property

Human Resources

Liability

Net Income


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Analyze andMeasure

The Risk The Assessment Of The Potential Impact The Various Exposures Can

Have On The Organization Review of potential exposures and the consequences to the organization

Retained Losses Self Insured Retentions Deductibles

Insured Losses

Uninsured or Unintended Losses Unidentified, or previously not considered or evaluated

Benefits of Contractual Transfer of Loss Potential

Transfer of Risk Through Hold Harmless and Indemnification Language Additional Insured Provisions

Subrogation Potential and Cost Recovery Methods


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ControlandFinance

The Risk Risk Control-

An Action To Minimize, At The Optimal Cost Losses That Strike TheOrganization.

6 Techniques Of Risk Control Avoid

Prevent

Reduce (Both Before and After The Loss) Segregation

Transfer-Either Contractual Transfer or Physical

Combination Of Techniques

Risk Financing- The Acquisition Of Funds At The Least Possible Cost To Pay For The Losses

That Strike The Organization.

Retention-The Acquisition Of Funds From Within The Organization To Pay ForLosses

Transfer-Contractual Or Other Arrangements Where Losses Are Financed FromOutside The Organization

(A) Non Insurance

(B) A relatively Small Known Cost Substituted For A Potentially Larger Unknown Cost


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Well, youve

Identified The Risk,Analyzed

and Measure The Risk,Controlled and

Financed It,

Now What?


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Implement The

Desired Action and PlanImplementation

Commitment and Participation

Senior Management Must Support Plan and

Implementation Communication

Plan Is Communicated To HR, Management, Bargaining Unit (If

Applicable)

Design and Structure Training

Accountability


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Monitoring, Examining, and

Evaluating The Results Of The Plans

Indicators and Measures

Actual Losses versus Expected LossesExperience Modifiers

Continuous Tracking

Regular Evaluations Adjustments and Upgrades

Feedback


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Our Markets

Aerospace and Defense

Construction

Manufacturing and Distribution

Private Family Offices


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Recent Success Stories


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Recent Success Stories

A Client Had Workers Compensation LossesDouble The Industry Average. As a result his

premiums had doubled and profits dwindled.

We reviewed and made adjustments to the clientsloss and safety programs. This ultimately reduced

losses to a more acceptable level.

We reviewed and implemented a formal process

for managing ongoing losses. This processincluded a formal process for subrogating lossesback to the responsible party for reimbursement.

In turn this improved the clients actual losseswhich in turn reduced his net cost for insurance

We hired a Nurse Case Manager to better helpmanage new losses and properly identify First Aid

cases thereby reducing reportable injuries to the

clients insurer.

Clients 2005 Premium $600,000 (Ex Mod 179)





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Case Study

(The Typical Ticking Time Bomb) Client had same broker for 21 years

110M Distributor

Referred by CPA Firm

Upset with lack of risk management by current broker

Contemplating change of risk manager No consistent risk audit review process for evaluating risk

Our review and audit demonstrated

Deductibles were too low

Client Dramatically Underinsured For Net Income and Property Values

Complete building remodel 1 year previously including seismic/earthquake

retrofitting No coverage for pollution indemnification assumed in lease agreement at 4

locations

No insurance certificate monitoring for product distributors

Lack of adequate controls over vendors insurance programs


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Risk Management Results

Property limits increased from $47M to $69M

Net Income Limits Of Insurance Increased From $12M to $37M

General liability increased from $15M to $20M

Retained more risk through increased deductibles

Transferred pollution indemnification to current carrier at no charge to client

Transferred more risk to carrier on earthquake values (including loss of income) by$14M

Negotiated with E/Q company to use the seismic engineering report to demonstratesignificant decrease in exposure of risk resulting in a substantial decrease in pricing$100,000

Installed insurance certificate compliance monitoring services

Implemented formal contract review process with customers, and distributors

Results

2006-2007 Premium $825,000

2007-2008 Premium $705,000


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Case Study #2

Aerospace And Defense Manufacturer

25M In Receipts

New CFO and Executive Team

Risk Manager Hired By Private Equity Group

CFO not aware of coverage's, or lack of them

Our referral source Investment Banker

No ongoing review process of risk


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Additional Facts Case Study #2

No contract review

Lease of premises indicated building insurance was lessees

responsibility

Inadequate limits of insurance for loss of income

No product liability for aerospace or defense parts

Client wanted coverage for specific parts

No coverage for international operations or lawsuitsbrought abroad

Workers Compensation Claims historical review showed

solid claims performance


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Risk Management Results #2

Properly identified limits of insurance deficiency in loss ofincome resulting in an increase in values from 2M to 10M

Properly identified lease terms and conditions to assurecompliance with indemnification, and insurance provisions

of lease Added specific aircraft product liability and included

worldwide coverage for defense, and compensatorydamages

Changed work comp carriers to industry specific carrier 2006-2007 Premiums $300,000

2007-2007 Premiums $240,000


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Our Best Clients

Referred By Senior Advisors and Current

Customers

Revenues From $20M Up

Known or Unknown Problems With Risk

Looking to Upgrade Advisors Not aware of current loss problems


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Current Targets

Private Equity Groups Plastics Manufacturers and Distributors

Machine Shops

Food Manufacturers and Distributors


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How Often Do You Assess Risk In Your Business?

What Did The Last Assessment Demonstrate?

Did The Assessment Highlight The Hidden Value In

Managing Risk Differently?

3 Lead In Questions For Your

Clients


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Audience Questions

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