“Which contributions can
risk-management consultants and insurance brokers make?”
Robert Kessler, Kessler & Co, Insurance Broker, Zurich
www.kessler.ch
Security and safety are important and a prime topic for
this industry. However, accidental losses are a fact of life. In recent years
the unpredictability and magnitude of losses exceeded in many ways our thinking
(World Trade Centre collapse, hurricane losses, tsunami victims, but also the
collapse of Enron).
Despite those dramatic changes there is a rational process to minimize the
adverse effect of losses and to find a balanced equilibrium between
opportunities and risk you enter to achieve your business goals. We address the
following 3 aspects that might be of interest to you:
a) Risk Management Process
b) Possible Risk Profile of Ropeway Companies
c) How to finance risks
a) Risk Management Process
The risk management process starts with identifying risks. The second step
is to analyse risks in respect of frequency and severity, often plotted as a
risk map. Most important for every firm or institution is the decision on a risk
policy. Which risks are we prepared to bear, which risks have to be eliminated
or transferred. Risk control and loss prevention are two extremely important
measures in the industry of transportation on rope. Most of the time this is
self explanatory, but we urgently insist to define a written risk policy which
is approved by the board of directors. Monitoring the results of it closes the
circle. Professional risk management consultants can help with risk control and
loss prevention measures.
b) Possible Risk Profile of Ropeway Companies
In the initial step of risk identification it is important not to think in
insurance terms “fire”, “burglary”, “machinery breakdown”. The risk
profile should not only include the so called hazard risks, but also the
strategic, operational and financial risks. Among the large risks are the
economy in general, the exchange rates fluctuations (especially the Swiss
Franc), interest rate fluctuations, but also the climate with weather conditions
or the lack of snow. It does not make sense to transfer small insurable risks
when the enterprise has to self-assume other large risks.
c) How to finance risks
Those risks a company cannot or does not want to eliminate or mitigate have
to be financed. There are a few basic principles in risk financing. Small and
frequent losses have to be self assumed. Large losses that can jeopardize the
enterprise should be transferred. Insurance is a frequently chosen option for
transferring the fire risk, but also bulk of the liability risk. The best mix in
risk financing can only be found by experienced insurance brokers.