Services

I offer services to help enterprises identify, understand and effectively deal with the risks they face.

I consider my services to be "bespoke"; i.e., customized rather than "standard" or "off-the-shelf."

That said, the following items often find their way into my engagement:

• Risk assessment
• Risk analysis
• Consideration, selection and implementation of risk treatment methods -- especially including awkward risks.
• Risk-based project and financial analysis
• Actuarial analysis of reserves and funding requirements for self-insured programs (for example, workers' compensation, medical malpractice, large deductibles, etc.
• Enterprise financial issues using risk-based analyses; i.e., capital needs and structure, profitability, portfolio analytics, product mix, complexity, etc.
• Applied advanced analytics.

Please see below for more information.

Risk Assessment

includes identification of as many risks facing the enterprise as possible and then calculating likely effects of those risks and/or the variation in those effects. This is not simply a checklist-and-list-of-insurance-policies exercise. I do this using, as appropriate:

• Observation and inspection
• Research and business intelligence
• Consideration of the enterprise’s risk intelligence
• Operations research, probability, statistics and actuarial techniques
• Forensic analytics
• Financial statement analysis
• And others as warranted.

This is the first step in determining how to treat those risks. (See below.)

The oft used normal/best/worst case of project or scenario analysis yields little in the way of useful risk information because it does not evaluate variability or likelihood of the scenario. Nor does it help you understand the drivers of any particular outcome.  Our risk assessment calculates not only the multiple possible scenarios, it also identifies the drivers of those scenarios and gives you some clues as to how to improve your situation.

Risk Analysis

on the other hand, takes the output from the risk assessment and examines the variability and impact of the various risks on the enterprise or project. It identifies weaknesses and errors in a plan, and guides management on ways to improve its situation and likelihood of success.

Risk Treatment

refers to what you do with a particular risk now that you have a quality assessment and analysis. Risk treatments generally fall into these categories (and generally applied in this order):

• Reduce/Control the risk – through engineering or operational adjustments. A “safety program” might be an example of risk reduction/control.
• Retain the risk – sometimes called “self-insurance." But there is so much more to it than that!
• Transfer the residual risk – generally through an insurance-type or capital market mechanism.

I offer services in evaluation, design and implementation of risk treatment methods.

With regard to insurance - Let me say. right here, that I do not sell ordinary, commodity insurance; so I do not compete with insurance agents and brokers. I don’,t and I don’t want to!

I expect that your selected insurance agent will sell you, at least, the standard typical insurance policies necessary for your enterprise. However, I do know a lot about insurance, and I can guide and assist the executive in matters of agent/broker qualification/selection and insurance evaluation and selection.

That said, there may be opportunities to transfer a risk through an insurance-type mechanism that your agent or broker doesn’t know how to use or is prohibited from using. In those cases, I may get involved in the placement.

With regard to risk control – Your insurer or broker probably provides some kind of “loss control” or safety program. These are generally directed toward work injuries, fleets, product liabilities, or property risks covered by their policies. Many of these programs are good as far as they go, but many are deficient in critical areas. I don’t purport to be in the risk control business per se, but I often help shore up the deficiencies and fill the gaps.

With regard to risk retention – Risk retention means keeping the effects of the risk “in house”. This is not a bad thing! Retaining a risk gives the enterprise much more control over what happens. However, unlimited and unplanned risk retention is reckless.

Risk retention (or more appropriately, loss retention) decisions require not only the use of actuarial techniques and probability/statistical analysis of the retained losses, but also a risk-based three-statement financial analysis.  This is especially important when the enterprise requires surety bonding!

Some common methods of risk retention (with which I can assist the executive or board) include:

• Naked retention. This is usually employed for small or non-consequential risks, but it can be employed for larger risks in conjunction with a good plan for controlling and paying the losses.
• Deductibles--be they large property loss, workers' compensation, etc.  These should be analyzed and planned.
• Qualified self-insurance. These arrangements usually apply to some regulated exposure such as workers’ compensation. They are regulated by some governmental bureau.
• Captive insurance companies. These are insurance companies owned by the insured entity or an affiliate. I do not promote captives; but I know a lot about them and I can help an executive who is considering such a vehicle.

 Specific Services in Support of the Enterprise Risk Management Practices 

• Quantitative analysis of self-insured programs (actuarial analysis)
• Quantitative analysis of single-parent or controlled group captive insurers (actuarial analysis)
• Financial analysis with risk considerations
• Forensic analytics