Weekly Wrap – 30th October 2014

 

Hi I am Tom McLeod, Co-Founder of McLeod Governance.

This is what I would be thinking about this week.

In this last week I have been approached to sit on a panel to consider whether insurance or assurance is more important.

Three Ways to Manage Risk

In preparing for that panel I am taken back to an instruction very early on in my career about the management of risk where I was told that there are three ways to manage risk.

Firstly to terminate the risk – i.e. to eliminate the risk.

Secondly to transfer the risk usually by contract.

And thirdly to manage the risk.

Those three approaches are all encompassing and obviously no one particular approach should be dominant over the other.

Equally one can provide both assurance over risks and insure those risks.

Insurable v Non Insurable Risks

A very useful technique that I have always adopted is looking at the risks through the prism of whether they are insurable or non-insurable risks.

It was once said to me that every risk can be insured at a price and that still holds.

The challenge that you really have is commercially is what level of insurance are you prepared to take out and what level of assurance are you prepared to undertake for those risks that you have not otherwise taken to market.

 

 

 

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