How to Make Your Clients Understand the Value of Risk Management

Recently, I wrote a guest post for our partners Sitkins International. ClearRisk is a strategic partner of Sitkins International and provides Sitkins members with a way to deliver the risk reduction approach online ™.

This post summarizes the first of three steps in helping your clients understand the value of risk management.

The insurance market is fiercely competitive.  Insurance agents and brokers (hereinafter agents) need ways to create a competitive advantage to attract and retain business.  There is a great opportunity for agents to really differentiate themselves by helping clients to manage risk more broadly than just providing insurance coverage.  The greatest challenge is that most of your clients don’t know anything about risk management; so how do you make them see the value?

Here are 3 how-to steps:

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25 Quick Tips To Get Started With Your Risk Management Planning (Part 2/5)

This is the second installment of five blog posts that summarize the 25 quick tips from my eBook, “Insurance Premiums Are Killing My Business”.  This risk management ebook is a great start for small to medium-sized business owners that are curious about starting the risk management planning process.

The tips below have been written with small to medium-sized businesses in mind, although the same principles should be employed by very large businesses.

Click here if you want to review risk management tips 1 – 5  before going on.

Risk Management Tips 6 – 10

6. Periodically check for unnecessary coverages.

Work with your insurance broker/agent to make sure you have all the coverages you need without paying for bells and whistles you don’t need.

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Insurance is a Commodity! …Or is it?

Often a topic for debate, the issue of insurance as a commodity sparked a great discussion on LinkedIn.  I’d like you hear what you have your say in own comments section below.

A commodity is defined a good that is the same no matter who supplies it, and can be differentiated based on price.

Is it true that all insurance is the same aside from price? How do most companies decide where to purchase their insurance?

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Do your employees feel safe blowing the whistle?

Throughout the lifespan of a corporation, stakeholders can be faced with the risk of economic crime.  Often, it becomes a reality long after the issue should have been brought to the attention of the board of directors. Entrepreneur that have invested a great deal of time and energy building a company from the ground up, find it hard to imagine that something as intrusive as economic crime can happen to them.

Do you have the processes in place within your company to mitigate this risk?  If you don’t have a plan and solutions in place, there is a possibility that you will be blindsided by fraud, worse yet – there’s a chance it could have been prevented.

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Best of @ClearRisk – Our Risk Management Twitter Feed

This is the first of  a series of blog posts titled:   Best of @ClearRisk – Our Risk Management Twitter Feed

Twitter is an amazing resource to stay current on what’s happening in the risk and insurance industry.  Every day we sift through the mounds of new articles and websites to suggest things that many of you would find helpful or interesting ( in 140 characters or less). For our readers who aren’t familiar with Twitter, here is a brief explanation of how it works: http://twitter.com/about  and here is a link to ClearRisk’s Twitter feed where we publish information daily: http://twitter.com/clearrisk

We’ve been fortunate enough at ClearRisk to meet a lot of interesting people that we follow daily to keep up on what’s happening across the globe in the risk and insurance industry.

There are a few thought leaders who regularly grab our attention with new blog posts and tweets. After you follow us on Twitter, be sure to check these guys out:

@RiskMgmt. Jared Wade is the editor of the RIMS-published magazine, Risk Management and  the RIMS-published blog  Risk Management Monitor. This particular blog post outlines the reality of what a risk can do to you in your industry by pointing out the net income of different players in the energy industry (http://www.riskmanagementmonitor.com/)

“RIMS-published magazine Risk Management” and “RIMS-published blog Risk Management Monitor”

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The Risk Management Process – In 5 Steps

I have always been a firm believer that good risk management doesn’t have to be resource intensive, difficult for SMBs to undertake or insurance brokers to provide to their clients. With a little formalization, structure and a strong understanding of your organization, risk management planning can be rewarding.

Risk management does require some investment of time and money but it does not need to be substantial to be effective. In fact it will be more likely to be employed and maintained if it is implemented gradually over time. The key is to have a basic understanding of the process and to move towards its implementation.  That is exactly why ClearRisk has developed its newest whitepaper: The Risk Management Process

There are many different risk management models available. Often times these models are unnecessarily complicated or written for an academic audience. We’ve developed this whitepaper from industry best practices and experience and in a way to which business people can relate.

In summary, the five steps in the risk management process are:

1.   Identify Potential Risks:
What can possibly go wrong?

The Risk Management Process

2.   Measure Frequency and Severity:
What is the likelihood of the risk occurring and if so what is the impact?

3.   Examine Alternative Solutions:
What are the potential ways to treat the risk and of these, which strikes the best balance between being affordable and effective?

4.   Decide Which Solution to Use and Implement it:
Find the needed resources, get the necessary buy-in and pull the trigger.

5.   Monitor Results:
Is your plan working? Are changes or updates required?

The whitepaper explains each of these steps in detail so you can move towards implementing a risk management plan. Click to view the free whitepaper on the Risk Management Process.

The Downside of Upside

The economic downturn has presented its share of challenges for business around the world. Adjusting to the “new economic normal” hasn’t been an easy task as the broad scope of operational changes, closures and bailouts have shown. It’s been a trying time for business, but positive signs of change are beginning to emerge; strategies are being aimed at making the most of the upturn, investments are leading economic activity and strategists are identifying early increases in consumer confidence.

Edging out of the recession and seeing better economic conditions around the corner, it’s important that businesses be aware of the downside of the upside of risk!

It’s common to view risk negatively, but every entrepreneur knows that there is no reward without risk. Risk brings opportunity and is the balance between the upside and the downside. There are many changes that will come with a global economy that is on the upswing; credit will become more widely available, businesses will begin to prosper and begin hiring, business spending restrictions will ease, investments will be made in infrastructure and companies will look for ambitious growth.

As discussed in one of our blog posts from last year, the downturn has been a time for improving operations, strengthening relationships with customers and preparing to make the most of the recovery. Now that the upswing is upon us, bringing positive change and room for growth, it’s important to plan for the risks that will no doubt accompany the opportunities presented. In the upturn of the economic recession, make sure you don’t become your own worst enemy.

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Using Risk Management to Increase Brokerage Revenue

We’ve written on the benefits of risk management and on its application by brokers in blog entries like Using Risk Management to Win in the Mid-Market and An Ounce of Prevention: Does Risk Management Really Work? So expanding on that, today The ClearRisk Blog brings you some of the ways that risk management can increase brokerage revenue.

• Attract New Clients: Providing something of great worth doesn’t go unnoticed. Including risk management advice and support as a value-added service for clients can make a brokerage stand out in the eyes of a potential customer.
• Better Terms in the Insurance Market: In working with your clients to identify risks and to ensure they carry the right coverages, you help your clients to become ‘best-in-class risks’. Having clients who are informed and knowledgeable about the risks that face their operations will bring them better preparedness as well as access to better rates and terms in the market. Organizations that work towards risk improvement are perceived more favorably by insurers.
• A Better Book of Business: Clients who take an active role in managing their risks have better loss ratios over the long term. With better client loss ratios, brokerages can earn higher CPC.
• Stronger Relationships with Clients: Providing risk management guidance to clients not only provides value, but it gives you the opportunity to meet and work with clients on positive, relationship-building terms. Working with them to identify potential risk areas and gaps in their coverages helps you to be seen as a provider of solutions; someone who is looking out for their best interest and who shares the same goals. This can help take your interactions with your clients to a whole new level, where long term and beneficial partnerships are built, maintained and valued. Think about your longest and best relationships with clients. What if you could replicate that trust and loyalty in all of your client relationships?

These are just four of the many benefits that the provision of risk management services brings to brokerages and brokers. On Thursday, April 22nd, 2010 at 2:00pm EDT, I will be conducting a free webinar on the Top Ten Ways to Use Risk Management to Increase Brokerage Revenue.

UPDATE:  You can view a recording of the live webinar here:  Risk Management for Insurance Brokers

Be a Better Insurance Consumer

Most organizations look to financial risk transfer through insurance as their first response to managing risks. Out of all the risk management tools available, insurance can often be the most expensive option. There are a number of simple things that can be done to minimize your insurance-related costs and to get better terms in the insurance market through your broker.

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Using Risk Management to Win in the Mid-Market

Insurance brokers are thought of as trusted advisors. Being an important point of contact between businesses and the insurance industry, brokers look out for the best interest of their clients and are depended on to ensure that their client’s businesses are protected.

But what does it really mean to be a trusted advisor? This role, as suggested by Maister, Green and Galford in their book, The Trusted Advisor, is first about gaining the confidence of clients. For brokers, there’s no better way to do so than to provide something of value.

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