Risk Management News & Reports

Below is a collection of important news and reports vital to protecting your company from risk.
Please check back frequently to stay abreast of all the current industry news..

LicataRisk Advises CEOs and CFOs to be StreetSmart in Risk Management

RISK MANAGEMENT STREET SMARTS

for CEOs and CFOs

 

                                          StreetSmarts defined:   “Having the shrewd awareness, experience and resourcefulness needed for survival in a difficult, often dangerous environment.” *

The world of risk and insurance is indeed a “difficult, often dangerous environment.”  Executives: have street smarts and survive; be naïve and …oh, oh!

Many in the insurance industry are there to “help” you.  But who is really on your side, and part of your team with your interest only at heart?

Insurance – Scenario 1:  It’s like magic

Your broker sells you an insurance program based on a five page proposal, a smile and a handshake.  Then, a month or so later what shows up?   500 pages of fine print! SHAZAM

Takeaway:  terms and conditions need to be negotiated in advance of binding (the whole gory mess of exclusions, conditions limitations).

Insurance – Scenario 2:  “No-one will do that.”

You want a certain coverage or specific language in the insurance and your broker says “no-one will do that” (translation: not available in the market).  Then you hire a risk management firm to  conduct a formal competition, and suddenly the unavailable terms become do-able (a sub-set of the magic phenomenon).

Takeaway:  Insurance is no different than any other business – what drives change is real competition.

Insurance – Scenario 3:  “[insurance co x] says they can’t compete with current pricing.”

This is the most common broker comment.  What !!!!   Don’t they realize that giving bidders their competitor’s pricing is not competition?

From a government investigation: “ So [broker] does not, as it contends, always ‘consider their clients best interest’…to the contrary [broker] primarily represents its own interests and those of its favored insurance companies.” **

Takeaway: the only real competition is multi-broker competition.

Contracts: “Don’t worry, just sign it.”

Non-insurance contracts need just as much attention as insurance contracts.  Liabilities are constantly being transferred by contract to the passive party. Don’t be the passive party!  Have someone who will work with you to:

  • be proactive in contractual transfer
  • resist an unfair attempt by the other side
  • coordinate contract matters and insurance terms

Understand it’s a chess game!

Loss Control: “Macondo is a nightmare well that has everyone all over the place.” (See article below)

Ignoring loss control makes financials look good in the very short term.  But lack of a risk management culture catches up very quickly.  Have a risk management culture – it will pay off hugely in all the following:  cost (direct and indirect via insurance premiums), public relations, customer relations, employee safety and good will, and avoiding personal liability.

See http://licatarisk.com/cms/the-bp-gulf-oil-spill-a-risk-management-debacle/ to see how total lack of a risk management culture cost BP over $40 billion in direct costs, probably over 100B in total  cost.  These scenes are reenacted on a smaller scale on a daily basis, causing countless companies to founder and/or sink.

Claims:  “Say no and see if they go away.”

You don’t accept a claim declination unless you agree with the insurer’s explanation, and you  can’t agree unless you really understand the insurance contract and all the case law surrounding it.  Have an expert on your side and get what you paid for.  Even if a denial is justified based on policy language, was there an error leading up to the situation which leads to recourse from other parties – either brokers or the parties who caused the loss?

Have a risk manager on your side

The largest companies have entire risk management departments reporting to the CFO.  What does your company have?

Think the following:  “I love my broker, but I love my company more.”

(c) Licata Risk & Insurance Advisors, Inc., 2017

 

 * thefreedictionary.com as applied to streetwise

** The People of the State of New York v Marsh & McLennan Companies

Risk Advisory Forum will be on September 28

THE RISKS HAVE NEVER BEEN HIGHER

 

Wednesday, September 28, 2016   4- 6:00 PM

Cocktails from 6 to 7:30

The Boston College Club – 100 Federal Street, 36th Floor, Boston, Massachusetts

 

What CEOs and CFOs need to know about the risks to their businesses and how to manage them

 

LicataRisk is extremely pleased to have the following guest speakers from law firm Foley Hoag:

 

Martin Pentz, a partner in the Boston office with a practice in insurance recovery

 

Creighton Page, an associate in the firm’s litigation department who also represents policyholders in insurance disputes

 

Abby Krueger, Senior Risk Advisor at LicataRisk, will also be a panelist and Frank Licata will moderate the program

 

AGENDA:

The what and how of risk management, and the inner workings of the dangerous world of insurance:

 

  • The CFO’s role in RM, and, …no, your broker doesn’t have it under control

 

  • How risk management allows you to move  faster

 

  • Reducing the cost of risk and insurance

 

  • How to manage the claims process:

 

-Reporting early, controlling the defense, motivating the insurer to pay, knowing when to litigate

 

  • Updates on the hottest issues:

 

-cyber risk and cyber insurance

-the elevated and escalating flood exposure

-the buyer’s market for insurance and how to tap it to reduce cost and negotiate terms

 

  • Who is the policy designed to protect? – red flags to indicate it might not be you

 

  • Cases that illustrate these points, and name names in the process

 

This is a not-to-miss program!

 

A networking reception will follow.

 

Seating is limited – Please contact Brent Trethewey for an invitation.

SAVE THE DATE

 

The Risk Advisory Forum

 

Sponsored by: Licata Risk Advisors and Foley Hoag

 

Wednesday, September 28th   4:00-7:00 pm

The Boston College Club – 100 Federal Street,

36th Floor, Boston, Massachusetts

 

THE RISKS HAVE NEVER BEEN HIGHER

 

What CEOs and CFOs need to know about the risks to their businesses and how to manage them

 

LicataRisk will team up with law firm Foley Hoag for this not-to-miss presentation.  A networking reception will follow.

 

Watch your email for the details and how to RSVP.

 

Details will also be posted on our website in the NEWS section.

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