Renowned author, teacher, and healer May Leigh Mercree is famous for saying “Happiness is a choice. Peace is a state of mind. Both are free!” Many businesspeople, especially those involved in risk management, would politely disagree. A peaceful state of mind, at least in business, is far from free. In some ways, the expense associated with peace of mind in business can be summed up with a simple acronym: TCOIR, or total costs of insurable risk. TCOIR represents the amount of money an organization has to pay to get its risks to an acceptably low level.
It's possible to estimate the amount of insurance you need to reach an acceptable risk level, it’s far better to use accurate data. One of the best ways to obtain dependable data to decide your TCOIR is using an integrated risk management (IRM) system. IRM software solutions aggregate data to provide a snapshot view of your organization’s risk. This enables you to reduce your TCOIR and earn the peaceful state of mind your company needs to innovate and grow. Here are the benefits of using IRM software to shrink TCOIR and how.
Improve Your Strategic Decision-Making and Allocation of Resources
Your financial and human resources are your most valuable assets, and you can use IRM software to leverage them to reduce your risk. An IRM platform presents you with the data you need to decide exactly how to invest your risk management funds. Instead of wondering which risks should take priority and how much they cost, you can rely on your IRM software to give you tangible, actionable numbers. In this way, you can rest easy knowing that you've taken all the necessary data into consideration and used it to optimize your risk-reduction investments.
The people in your organization that can help reduce risk are also a pivotal resource. Using IRM software, you can decide who does what and how much time they should invest. The first step is getting the data you need from your IRM platform. You can then follow up by investing more in your risk management force or shifting some funds to pay for risk mitigation professionals, such as cybersecurity staff.
Actively Promoting a Safety and Loss Control Culture
Even though safety and loss control are on most people’s list of things to be concerned about, it often takes concrete data to make them truly top of mind—and an element of company culture. With IRM software, you can organize, analyze, and present data regarding risks that can inspire a culture where people:
- Understand and support investments in risk management
- Are driven to play their part in reducing risk
- Think creatively about how to make decisions in their day-to-day work that reduce risk, especially when it comes to safeguarding company assets from theft, damage, or harmful mismanagement
Optimizing Risk Transfer Costs
Shifting the costs of your risk to an insurance company is a weighty, often expensive decision, so you need data to ensure your investment pays off. With IRM software, you can easily quantify the financial impact of risk events. You can then use this data to decide the percentage of potential loss your organization should be willing to pay to help minimize the chances of it happening.
For example, suppose you use your IRM software to estimate that a four-hour outage due to a powerful storm would your company $120,000 and this occurs, on average, once every 5 years. You may decide that if you can get a policy that costs 1/10th of this amount, it would be worth the investment. Of course, numerous other factors would have to be taken into consideration as well. But regardless of how the numbers pan out, the decision process starts with the kind of data that an IRM solution can provide.
Better Management of Retained Risks and Captive Management
The decision to take your risks by the horns and handle them using either risk retention or captive management can be both strategically sound and somewhat risky in itself. With retained risk, you set up a “rainy day” fund that you tap into when there's an adverse event. With captive management, you establish your own insurance company, acting as its parent.
These both require hefty investments, but they also give you more control over your risk management solution. By using insights derived from your IRM software, you can decide:
- Which risks you want to offset use a retained risk or captive management strategy
- How much to allocate for the coverage of each risk
- The most likely risk events to focus on
IRM software is essential to optimal decision-making outcomes. By improving the accuracy and accessibility of the data you use, you can reduce not only your risk but administrative burdens and the impact of losses. With Ventiv’s integrated risk management software, you get built-in analytics that enables you to make decisions that offset, offload and minimize risk. The result? You and other stakeholders get a well-earned peaceful state of mind. Learn how by chatting with an expert today.
