This is the first step in developing a comprehensive risk management program. The RMA identifies, analyses, and reports on an organization‘s material risk exposures. It provides a multi-dimensional view of risk, taking into account organization-wide enterprise risks and specific insurance-related exposures. A typical Risk Management Assessment consists of five steps, they are:
1. Get to know the organization. Gather as much information as possible to learn about the organization, establish objectives, and review a timeline for completion of the RMA.
2. Examine risk management techniques. Take a closer look at the existing insurance coverage, what losses have been experienced, and the organization‘s Total Cost of Risk (TCoR), as well as the risk management best practices currently in use.
3. Identify and analyse exposures. Ask a series of questions designed to uncover risk exposures and prepare an action plan to protect against these risks.
4. Implement the plan. Address gaps in insurance, finalize loss reserve reviews and procedures and set a strategy for improvement.
5. Monitor results and provide support. Form a work group with members from the organization and provide on-going guidance on risk-related issues. Recommend actions that support continued TCoR improvement.
Working with the senior management team, the risk management consultants will:
- Gain a thorough understanding of the organization and business model, including competitors, supply chain, production and distribution risks.
- Consider strategic drivers and any obstacles that might impact achieving long- and short-term goals.
- Identify and analyse operational exposures to evaluate the level of materiality the company can absorb.
- Evaluate existing risk management practices and insurance programs and recommend ways to lower the organization’s TCoR.