Definition of a risk: “Uncertainty concerning a loss arising due to a given set of circumstances.”
Basic principles of risk:
Do not hold more than you can handle in loss
.B. Do not risk much for little.
Consider probability of events and their potential impact.
There is no “uninsured loss”. “An uninsured loss” is equal to retention rate.
The risks that companies face around the world have drastically changed over the years. Today, in addition to the concerns of traditional risks, such as natural disasters, the risk scenario has expanded to include the risks of damage to reputation, new regulations, compliance, property damage, increased competition as in the case of Mexico, energy reform that opens up the market to private sector. Therefore it is essential to have a program that has a unique profile of risks and exposures. Which it is known as a Risk Management Program.
It is important to establish risk management: “The process of protecting the assets of an organization through an identification and analysis of exposures, controlling exposures, funding losses with internal and external funds, and implementation and monitoring of the process risk management.”
The objectives of risk management in a business include the before, during and after a loss.
Before:
The efficiency (competitiveness) and growth
Regulatory / Compliance
Focus on manageable risk
Low deviation of objectives
To promote stability and profit maximization
Cash Flow
During:
Protecting people
Protect assets3. To collect data, information and resources to recover loss / claim (internal and external)
Loss duration estimate / claim and lay out an adequate funding
After:
Survival
Stability (return to efficiency, competitiveness, profit maximization as soon as possible)
Maintain profitability or return to profitability
Maintain growth or return to growth
Good Citizenship / Social Responsibility: we must not pass as “bad,” this may represent expenses (public relations) that were not considered necessary before it occurred further loss (eg environmental disasters)
A risk management program consists of 5 stages
Risk Identification: The process of identifying and examining exposures of an organization a.Property (Real) b. Human Resources c. Liability d. Net Income / Net Income
Risk Analysis: Evaluation of the potential that the various exposures can have impact on the company; there are two types of analysis a.Qualitative analysis b. quantitative
Risk Control: Any action or inaction that minimizes consents, at optimal cost, probability, frequency, severity, or the uncertainty of loss a.Avoid, b. Prevent, c. Reduce, d. Segregating / separating / double, e. Transfer (whether contractual, physical, or both)
Risk financing obtaining internal and external funds to the best possible cost to pay for losses through two modalities
4.1 Retention: internal funds to finance losses
4.2 Transfer of responsibility: Insurance
Risk Monitoring: implementation and monitoring of the risk management process
In the phase of risk financing should be noted that retention generates a financial burden on companies, which are convinced that the best way of financing risks is the transfer through insurance, there is no “loss uninsured.” “An uninsured loss” is equal to a traffic jam.
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