Risk Management System Improvement (Benchmarking)
Looking at the operations within a business we saw major differences between units who were actively managing risks and units where Risk Management was low on the priority list.
1. Risk Management
We sat down with the key Risk Management discipline specialists and identified the desired levels of risk management. We looked at the management process in such a way that we were able to identify both financial investment in risk management and “human” investment in controlling and managing risk. We also looked at the inherent risk profiles in different business units to identify the higher exposures.
With this we developed a monitoring system that graded the levels of response to each area of risk as well as the actual exposure. A combination of these factors created a Benchmarking score which identified the actual commitment of each unit.
We created a self audit process which allowed every unit to establish how they could achieve the scores and clearly established the minimum acceptable score, the initial target scores and the ultimate goal score. Each unit would complete the template and sigh it off with their senior management before submitting it to the Head Office. All risk audits and surveys use the same scoring process in their reports.
We also used the benchmarking scores to allocate risk management and insurance costs across the business units.
We were able to use the benchmarking scores with the brokers when presenting to the underwriters and, as time progressed, we were able to demonstrate our proactive risk management improvement resulting in improved premiums upon renewal.
As the benchmarking was rolled out we witnessed the competitive stance of the various Business Units within the Group. All Units wanted to be at the top of the published league!
We created a prize for the best and “Most Improved” Business which further focused the interest of the operations.
After five years the scoring had to be recalibrated as the entire Business had improved to well beyond our original goals. This continued beyond the recalibration.