RISK MANAGEMENT

Risk management is a process by which organizations identify, assess, manage and control those risks that impact on the organization’s profitability and ability to produce its goods and services.Businesses manage different risks that they face on a day-to-day basis.  The risk management process provides a framework within which organizations can effectively manage those risks that they are faced with. Capitol Insurance Brokers believes that Insurance is but a small component of the Risk Management process, hence the need for organizations and individuals to appreciate the risks associated with them on a daily basis. By appreciating Risk Management, one will be in a position to know his/her risks, the pros and cons of the risks and possible mitigatory measures.

The Enterprise Wide Risk Management Approach:
An organization that embraces Risk Management is always prepared to safeguard itself against losses that may hinder operations. This entails getting the knowhow of the Operational Risks, Financial Risks and Market Risks likely to be faced so that measures will be taken to reduce the impact or degree of damage. An ERM approach also enhances the basis of decision/policy making for an organization as company objectives will be clearly articulated and bring out a clear ratio between risks involved and rewards to be gained.

Capitol Insurance Brokers therefore is handy in helping individuals and corporates by aligning risk management and goals to be attained.

A thorough embrace of the concept should see one coming to terms with risks and preparing adequately for the unexpected happenings. When risks are clear, ways of mitigating the same will also be clear hence enabling the company to take more controlled risks and capitalize on opportunities.

An effective ERM programme will also help organizations to create reliable and cost effective risk aversion measures. At least there will be ample time for one to appreciate the risks to expect and find means and ways of getting around them.

An effective ERM programme will definitely form the basis for a Protection Plan. One should not be caught unaware and needs to look at Risk Management as a whole. The success of the above approach however hinges on the ability of management and staff to identify objectives of the company, define possible hindrances to achieving set objectives and devising means of seeing everything through. This will entail a collective responsibility towards success or failures and in most cases; failure will never be an option.

What role does Capitol play in managing clients’  risks?
For all our corporate clients, Capitol is moving towards a broader approach to helping with risk management than selling policies. Having realized the importance of following the Risk Management flow process, Capitol is no longer sticking to selling insurance only but is becoming part and parcel of the risk management process.

Our duty is to provide risk management consultant services with an aim of reducing the total cost of insurance. Of the whole risk management flow process, Insurance  makes up 20% of effective risk management. While Capitol can drive down total costs of risk by focusing on the 20%, attention will also be focused on driving down the other 80% along with the insurance piece. Truth be told, if you effectively manage the primary 80%, the savings will show in the 20% most organizations focus on.

For success of the above, Capitol is therefore spearheading formation of risk committees for every corporate account comprising of members from the client, the broker and the insurer.Capitol then coordinates regular seminars of these committees where the goals will be to:

• Identify Potential Exposures’  i.e.: perceiving hazards, identifying failures and recognizing adverse consequences.
• Measure Frequency and Severity  i.e.: determine the degree of occurrence of the losses and the impact of each occurrence.
• Examine Alternatives  i.e.: estimating the risk probabilities, judging acceptability of the risks against benefits to be realized.
• Decide Which Alternatives To Use
• Implement The Chosen Techniques
• Monitor Results

The end result will be to decentralize the process into various departments of the organization and ensure the above is cascaded down to every part of the company. Risk Surveys will then be conducted for the departments to ensure that the risk management process is implemented thoroughly.