In this series, we are focusing on ways in which a Risk Manager can add value to the bottom line of his or her organization using RMAP(1) technology.  These avenues of added value include: lower cost, asset protection, revenue enhancement and competitive advantage through better management of tactical and strategic Risk.  

Lower Cost:  Risk Manager’s typically have influence in three cost categories.  

1) Pre-Loss, 2) Point of Loss and 3) Post Loss.   Today’s BLOG will focus on a pre-loss item… Allocation.

Some years ago I heard a wise risk manager say “accident prevention is not a risk management problem but rather, a management problem.”  He was absolutely correct.  But how does the local manager know what to do?  And what are his or her incentives to do the right things.  An RMAP(1) can be used to produce loss allocation models that match up with desired behavior.  Perhaps a penalty per loss day will drive more aggressive return to work.  A carrot or stick around report lag would encourage early reporting.  Benchmarking frequency per unit of exposure between peers  with an allocation credit thrown in for the winner might drive a healthy intra-organizational competition and more prevention activity.  In addition, proactive dashboards delivered to the field can assist in keeping score on their efforts.  Getting local management engaged in the correct prevention behavior often produces 10%-30% savings in WC and Liability.

(1) RMAP = Risk Management Automation Platform (this is not an official term… I just made it up)