It can be said that insurance is “a solution trying to find a problem.” In the financial services industry there are many, many problems, of course, which continue to dominate newspaper headlines. These problems are defined as “risks” in corporate speak. What is frightening is the number of organizations that still do not have a clear understanding of which risks are mitigated through the insurance they already purchase.
On one side of the equation, risk is huge potential cost plus tied-up capital—on the other side there is insurance, which should, in part, balance the equation—as a risk mitigant (for a given, often lower, cost than capital).
So if you want to avoid surprises this Halloween, understand the risks your organization is running, establish the extent to which they are being managed and in the event that all else fails, make sure you know when insurance will be your backstop.
|This post was part of the special feature about Our Scariest Risks, published October 31, 2011. The feature also included these other risks:|