Ventiv Resource Library
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In both 2009 and 2012, total cost of risk (TCOR) reduction and management is ranked as the ninth most important benefit of using risk technology. This reflects the understanding among respondents that the key to risk management and TCOR reduction lies with better management of a company's risk data. TCOR comprises four categories of costs: risk transfer, risk retention, external risk management and internal risk management. Accurate, reliable data helps risk managers measure and design optimal risk retention and transfer structures, thus optimizing the organization's TCOR. Understanding, controlling and lowering TCOR can lead to a dramatic financial impact. To achieve optimal results, CFOs and risk managers must collaborate to identify the lowest sustainable cost of insurable risk; to identify the lowest sustainable cost, organizations must understand how different components of TCOR interact and identify the right balance between retaining risk and transferring it. Well-designed risk technology can deliver these critical insights. Organizations gain a greater awareness of their risk and consequently more control by embracing the following goals: • Presenting better quality data to the market, resulting in optimized insurance premiums • Identifying trends in loss history to implement and drive loss- prevention strategies • Centralizing data for a consistent structure and a more efficient renewal process • Implementing new workflow efficiencies, such as reduced claim settlement timelines • Providing a complete overview of the risk financing structure by capturing global and local policy information with better quality data With these improvements in place, CFOs and risk managers can present clearer overviews of TCOR to the board of directors, while identifying innovative strategies for reducing costs. Total cost of risk reduction/management 22 Global Risk Technology Survey 2012 Aon Risk Solutions | Aon eSolutions 10 9