Blog by Garry Watts, CPCU, CRM
One of the things that is driving the complexity of business today is emerging risk issues. How are you identifying risk issues that are either costing you money now, or could cost you money in the future? One of the critical resources that I appreciate as a CEO is insight on potential risk issues that may take down my business.
What are emerging risk issues? I define emerging risk as:
- Risks that have increased in severity
- Risks that have increased in frequency
- Risks that are new (like cloud computing risks)
Specific examples of emerging risks are coming from compliance issues, health care reform, obesity, an aging population, reputation risk, supply chains, employment practices, attracting and retaining employees, economic crisis, and energy prices to name a few. Emerging risk issues can take down a company in Winona, in Minnesota, in the United States, and anywhere in the world. This is not just a Fortune 500 company issue.
Emerging risk areas many times can’t be transferred to an insurance carrier because there is no insurance policy offered to cover the risk. The Lloyd’s of London 2011 Risk Index ranked the top 25 risk issues globally by 500 C-suite executives from around the world. Nine of the top 25 risk issues could be covered by an insurance policy. The other 16 risk issues could not.
Emerging risks can come out of nowhere. The only way to keep up is to be proactive. Assess the business risks that exist, prioritize these, and then create a plan to manage them on an ongoing basis. Realize that many of the emerging risk issues cannot be solved by an insurance policy. However the risk still exists for your company. Work with a broker that is going to help you identify these risk issues on a proactive basis.