38 | JANUARY/FEBRUARY 2019 | Claims Magazine |
Every profession has a multitude of risks to manage. Risk management itself is a profession, with various
processes, procedures and tools to follow and use properly to avoid problems.
However, the key to any form of risk
management is carefully utilizing available risk dollars between risk control and
risk financing to achieve the best result.
Risk implies loss, and loss has cost,
whether or not an actual loss occurs.
Owning a car has risks, and most purchase expensive auto insurance to cover
a potential loss. If no loss occurs, the
money for insurance was a cost and is
spent again for the policy’s renewal.
The risk management formula is simple: first, identify the exposures. This may
include identifying and examining potential perils that might cause a loss. Next,
search for hazards that might trigger
such a peril, and decide how to address
that hazard. Some hazards are accepted,
others modified or reduced, and some
simply eliminated. This is part of the “risk
control” or “loss prevention” process.
Once the program is in place, the risk is
reduced, but not eliminated. Some means
of paying for loss may result, requiring
planning and financing. Insurance is
one such way, and this series will discuss
Risk managing ‘pickles
After 21 years as a corporate risk and
claims manager for a major international
risk services company, whenever I was
asked to describe this complex job, the
best answer was, “food services: I dealt
with pickles and jams!” Occasionally a
sheriff would serve a lawsuit somewhere,
and when it arrived at the home office,
there were only a few days to respond.
Each lawsuit or claim had to be investigated, evaluated and resolved, even minor
ones with little or no liability.
There were several thousand auto-
mobiles that had to be risk managed,
and thousands of employees who could
generate claims involving workers
compensation, disability, dishonesty (that
was rare), unemployment, garnishments
and employment practices. There were
buildings and their contents and all of
the computers, plus hundreds of leased
premises that might suffer loss, each with
a lease that had to be reviewed, often with
“certificate of insurance” requirements.
We negotiated every “hold harmless and
indemnity agreement” and evaluated
every contract for hazards.
After eleven years of handling claims,
the risk management assignment was a
step into the wider arena of risk science,
which included publishing and teaching.
Until then, “risk management” consisted
of several executives who managed one
or two of the various corporate insurance
policies, where each with different agents,
different companies and different inception dates and coverages. In short, coverages were non-concurrent and scattered.
The first task involved bringing them
together to see what was involved. It took
several years to accomplish concurrency
with a single broker, and even then, it
took years to conclude old retrospectively
rated policies. Policy coordination is just
a small part of adjuster risk management;
it’s the risk analysis, follow-up and evaluation that takes time. In some companies
the employee benefits programs are also
the risk manager’s responsibility. Something stronger than Excedrin may be
Over the next few months, we will look
at the various aspects of risk management
as they may apply to adjusters and provide some insight on risk avoidance and
management to reduce the frequency and
severity of loss.
Ken Brownlee, CPCU, (kenbrownlee@
msn.com) is a former adjuster and risk
manager based in Atlanta, Ga. He now
authors and edits claims-adjusting
textbooks. Opinions expressed are the
Adjuster Risk Management
Tools – Part 1
Editor’s Note: This 7-part series will provide guidance on how to handle day-to-day loss