Advising clients on new and emerging risks is a core part of an insurance adviser’s role, however, according to Marsh Insurance Brokers, clients shouldn’t be too quick to shy away from potential risk either.
Costa Zakis, Marsh’s Head of Risk Consulting, Pacific, says brokers should always encourage their clients to review their risk profile and reassess how much risk they are comfortable taking on, especially given the current pace of change. He says a lot revolves around understanding the environment that each client is operating in, and which risks are worth being exposed to for the potential of growth.
“In business, where there is risk there is opportunity,” Zakis told Insurance Business.
“What I always say to my clients is that they do need to remain vigilant and curious. They must pay attention to the changing business environment they’re in, and the risk profile of the areas where they’re doing business. They’ve also got to always challenge every assumption they’re making about which risks their business is facing, and ask whether or not they’re still valid.”
Zakis says that as soon as the risk level changes, businesses should assess whether that environment is still viable for them, and what potential updates they may need to make to their insurance policies. He says more focus needs to be put on prevention rather than dealing with fallout, as well as thinking about doing some serious scenario testing.
“If your risk level changes, you’ve got to change the way you manage that risk,” Zakis explained. “The challenge for businesses is never to rest on your laurels and constantly reassess everything – where am I doing business, what does my risk profile look like? Is that level of risk acceptable? Are the limits that I have in place in my insurance policy providing me with the level of protection I need? Do the exclusions still apply?
“Tools like our Global Risk Report should inform businesses on where to look, and perhaps encourage them to consider things they hadn’t considered before. But, equally, we want businesses to have an analyst’s curiosity in terms of understanding their environment, and making sure they have solutions in place to help them manage it.”
“Sound principles of risk management are very prevalent, effective, and they’re what we want people to do,” he concluded. “There’s nothing like scenario testing your response to a range of perils. You should think about how you’d manage a high-consequence low-frequency event, or how you’d manage several low-severity events that might occur within the same time window. Low-to-medium impact events can be as disruptive to a business as a high-consequence event, and constantly checking the relevance of each risk and redesigning solutions is an absolute imperative for businesses.”
