NeuGroup members are creating risk teams within finance that rethink risk from a top-down perspective.
In response to rising commercial insurance premiums and other factors, NeuGroup members are taking proactive steps to fortify risk management strategies. One option that came to light at a recent session of NeuGroup for Risk Finance and Insurance: creating a risk management team that sits within finance and is empowered to work with safety, claims and insurance teams to foster a company-wide culture of risk awareness.
- Members at the session shared insights on the road to better risk management—including one who implemented a new RMIS (risk management information system) that allows the risk team to track on-the-ground activities at multiple customer-facing locations.
Strategic location. Some members said their companies’ safety teams work well within operations, with insurance and claims units residing elsewhere. Others emphasized the value of a centralized team that sits within finance.
- One member commented that sitting within finance gives the risk team wide-ranging visibility into activities like upcoming mergers and acquisitions.
- This structure also allows the team to partner closely with treasury, which provides insight into liquidity—a key component when determining the corporate’s risk tolerance, dependent on its ability to absorb unexpected losses or expenses.
The language of risk. Because these risk teams’ collaborative ethos extends beyond operations within finance, they also lead to strong partnerships with ERM, legal, compliance and internal audit teams.
- A key step that made it easier for one member to work closely with these teams was to create a standardized language around risk, coming to a shared understanding of the meaning of phrases like “high risk” and “critical risk,” including monetary value and likelihood of occurrence.
- The member said these teams have quarterly meetings with their closest business partners, emphasizing the value of proactive discussions on risk reduction. This regular interaction allows for strategic conversations focused on preparing for potential future risks, rather than only collaborating when there is a problem to solve.
Empowered business partners. One critical strategy employed by some members is a two-pronged approach to promote safety at each of a company’s buildings: centralized teams that work to reduce risk through efficiently designed processes, complemented by onsite safety professionals that partner with the business by leveraging their on-the-ground perspective into trends and hazards.
- Using the company’s RMIS, onsite safety teams report and track any incidents at their locations. The data is then consolidated into dashboards, enabling stakeholders to have a predictable and understandable view of the company’s exposures.
- By establishing a culture of shared responsibility, this approach motivates all members on the team to become true partners to the business, actively contributing to risk management discussions and decision-making processes.
- For one member, a RMIS system was quickly tested after implementation when the company had to make changes to its operational plans nearly overnight. The central teams responded swiftly by establishing streamlined checklists for the onsite safety employees, which facilitated implementation of new processes for escalations and interventions.
- This collaborative approach ensures that risks are identified and addressed in a timely manner, fostering a proactive risk management culture throughout the organization. As a result, the company is better equipped to anticipate and mitigate potential risks, safeguarding its operations and financial stability in an ever-changing business environment.
