“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.

The risk profile should also include such risks as terrorism, lack of snow and permafrost. I do not say those large risks are easily transferable, but in a proper risk analysis they have to be quantified. If those risks do not correlate with easily transferable risks, this professional approach might lead to a more aggressive risk financing policy. Every risk which a company can bear itself is best financed with self-assumption, at least in the long run.
The insurer often wants to sell coverage to people and organizations who are afraid. Risk financing consultants and insurance brokers have the task to convince clients, that it is in their interest to know, prevent and reduce severe losses and accept a predicable uncertainty.