Commercial insurance brokers are among the most prominent and relevant players in the modern insurance panorama. As the entities most often called upon to deal with business insurance, these types of offices tend to deal with a variety of aspects within their field of expertise, and are often crucial in ensuring an office, business of company retains or regains its financial health and is protected against any costly eventuality.
One of the many fields these companies are often requested to look at in the context of corporate and commercial insurance, as well as one of the least understood by layman business owners, is risk management. This article will seek to provide a little more insight into what exactly is meant by that term, and how commercial insurance brokers can help companies and businesses deal with this aspect of their insurance.
What is Risk Management?
As the name indicates, risk management deals with assessing and managing potentially risky situations in everyday life. In the context of a business or company, this may involve identifying potential loss situations, devising solution meant to prevent said situations from occurring, and drawing up a plan to implement those solutions. The task commercial insurance brokers are usually entrusted with involves ensuring the client’s risk-benefit ratio remains as consistently positive as possible, and that any potential risks are dealt with quickly and efficiently.
Risk management is usually carried out in a three-step process. The first step involves understanding the risk, and the consequences it might bring about if allowed to occur. The next step is to assess and analyse the risk, and to come up with potential solutions to prevent or minimise its impact. Finally, action must be taken to implement or apply the solution or solutions thought to be more effective in taking care of the issue. This three-step process is applicable to any area of human life, and remains unchanged when transposed to the context of corporate and business finance. The only difference is that, rather than be carried out by the business owner or its board, it is usually up to commercial insurance brokers to take care of this three-step plan and ensure any risks to the business are dealt with.
How Can Commercial Insurance Brokers Help?
As noted above, the main way in which commercial insurance brokers can help companies with risk management is by carrying out the three-step process described in the first section of this article, while transposing and adapting its structure to fit a corporate or business context.
This is usually done with the help of a series of internationally recognised standards and procedures, put in place to standardise and streamline the risk management process for commercial insurance brokers worldwide. This is the template most commercial insurance companies start from when undertaking risk management, and it is flexible enough that each broker can adapt it to fit the situation at hand. As such, it is no surprise that this is the mould followed by most insurance companies the world over when dealing with a request of this type. There are, however, exceptions to this rule. Certain companies prefer to set their own individual standards and practices, or come up with techniques not accounted for by the international rules.
Whichever way they choose to go about it, however, commercial insurance brokers tend to have a common goal when dealing with risk assessment: to help companies pinpoint, prepare for and eventually deal with potentially dangerous or financially harmful situations brought about by their circumstances. It is the variety of measures and ways through which this is achieved that is commonly understood as ‘risk management’.