Our Solutions
Enterprise
Risk Management
All entities face uncertainty. The challenge for management is to determine how much uncertainty to accept. Uncertainty presents both risk and opportunity, with the potential to erode or enhance value. Enterprise risk management (ERM) enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value.
A captive can provide an effective means of funding self-insured risks, lowering the cost of certain types of insurance, and maintaining greater control of the risk management process, while providing long-term stabilized pricing that can issue customized policy manuscripts – independent of the insurance industry’s market cycles, where the uncertainty of a bona fide claim being honored is minimized.
A risk management framework
ERM helps management ensure effective reporting and compliance with laws and regulations, and helps avoid damage to the entity’s reputation and associated consequences. The following capabilities inherent in ERM help management achieve performance and profitability targets, and prevent loss of resources.
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Align risk appetite and strategy
Evaluate strategic alternatives, set related objectives, and develop mechanisms to manage related risks
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Enhance risk response decisions
Identify and select among alternative risk responses from; risk avoidance, reduction, sharing, and acceptance
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Reduce operational surprises and losses
Identify potential events and establish responses, reducing surprises and associated costs or losses
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Identify and manage multiple cross-enterprise risks
ERM facilitates effective response to the interrelated impacts, and integrated responses to multiple risks
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Seize opportunities
By considering a full range of potential events, management is positioned to identify and proactively realize opportunities
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Improve deployment of capital
Obtaining thorough risk information allows management to effectively assess overall capital needs and enhance capital allocation
Types of insurable risks
Enterprise risk management is the capability of an organization to understand, control, and articulate the nature and level of risks taken in pursuit of a risk adjusted rate of return. Insurable risks can be grouped into multiple categories.
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Hazard risks
Risks that have traditionally been addressed by insurers, including fire, theft, tornado, earthquake, windstorm, flood, general liability, business interruption, pollution, and health
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Financial risks
Potential losses due to changes in financial markets, including interest rates, foreign exchange rates, commodity prices, liquidity risks, and credit risk
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Operational risks
Customer satisfaction, product development, product failure, trademark/copyright protection, corporate leadership, information technology, management fraud, and information risk
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Strategic risks
Factors as completion, customer preferences, technological innovation, and regulatory or political impediments
We work with management to develop a strategy to maximize value by striking an optimal balance between growth and return goals and related risks, and efficiently and effectively deploy resources in pursuit of the business’s objectives.
Identify
Working with your management team, Captive Planning identifies events that may positively or negatively affect an entity’s ability to achieve its objectives and performance goals. Potentially negative events represent risks that provide a context for assessing risk and alternative risk responses. Potentially positive events represent opportunities, which CPA can assist management in channeling back into the objectives of the business.
Assess
The identified risks are ranked by determining the risk magnitude, which is the combination of likelihood and consequence. Generally, if the magnitude or severity of the risk under consideration is high, the risk response needs to be strong (mitigate, transfer or avoid). Captive Planning works closely with management to determine if certain risks should be retained by the business, transferred to the commercial market, or underwritten in a captive.
Evaluate
Once risks are identified, we determine the likelihood and consequence of each risk. This will include knowledge of the factors critical to success and the threats and opportunities related to the achievement of objectives. This allows CPA, in conjunction with management, to develop an understanding of the nature of the risk and its potential to affect the business’s goals and objectives.
Control & Monitor
We work with management to establish and implement policies and procedures to help ensure the risk responses are effectively carried out. Relevant information is identified, captured, and communicated to enable people to efficiently carry out their responsibilities. Over time, the performance of the risk management strategies are continually gauged in order to provide a context for considering risk that may be scalable over time.
