Hidden Profits Risk Management

Finding Hidden Profits Through The Risk Management Process
Colin Baird 1113 West Avenue M-4, Suite C Palmdale, CA 93551 Direct Telephone: 661 486-2202 Fax: 661 281-4992 Cell: 661 332-0382 Email: ColinB@wmi.cc or Riskmanager@vzw.blackberry.net
There Are Five Basic Steps To Risk Management
Colin D. Baird riskmanager@vzw.blackberry.net
Identify The Risk
Monitoring Examine and Evaluate The Results Of The Plans
The Risk Management Process
Analyze and Measure The Risk
Implement The Desired Action and Plan
Control and Finance The Risk
Identify The Risk

The process of Identifying and Examining the Potential Sources of Losses Faced By The Organization.
Process Based Evaluations
Step 1
C Level Executive Meetings To Discuss Commitment To Desired Outcomes Facilities and Worksite Evaluations Risk Checklist and Survey Audits Specific To SIC Classifications Insurance Policy Analysis Net Income/Financial Analysis Compliance Review Contract Review and Analysis Policies and Procedures Review (Employment Audits Using Outside Counsel) Computer Based Risk Modeling To Review Probable Sources and Losses Of Organization
Step 2
Step 3
Comparison Of Client Losses Against Industry Losses Baseline Comparison Of Limits of Insurance Against Similar Sized Organizations
Step 4
A Few Examples of Identifying
The Risk
Checklists
Insurance Policy Analysis Physical Inspections Net Income/Financial Analysis
Logical Classifications Of Risk

Property
Human Resources
Liability
Net Income
Analyze and Measure The Risk

The Assessment Of The Potential Impact The Various Exposures Can Have On The Organization
Review of potential exposures and the consequences to the organization
Retained Losses
Self Insured Retentions Deductibles
Insured Losses Uninsured or Unintended Losses

Unidentified, or previously not considered or evaluated
Benefits of Contractual Transfer of Loss Potential

Transfer of Risk Through Hold Harmless and Indemnification Language
Additional Insured Provisions Subrogation Potential and Cost Recovery Methods
Control and Finance The Risk

Risk Control An Action To Minimize, At The Optimal Cost Losses That Strike The Organization.
6 Techniques Of Risk Control
Avoid Prevent Reduce (Both Before and After The Loss) Segregation Transfer-Either Contractual Transfer or Physical Combination Of Techniques
Risk Financing The Acquisition Of Funds At The Least Possible Cost To Pay For The Losses That Strike The Organization.
Retention-The Acquisition Of Funds From Within The Organization To Pay For Losses Transfer-Contractual Or Other Arrangements Where Losses Are Financed From Outside The Organization
(A) Non Insurance (B) A relatively Small Known Cost Substituted For A Potentially Larger Unknown Cost
Well, youve Identified The Risk, Analyzed and Measure The Risk, Controlled and Financed It,
Now What?
Implement The Desired Action and Plan
Implementation Commitment and Participation

Senior Management Must Support Plan and Implementation Communication
Plan Is Communicated To HR, Management, Bargaining Unit (If Applicable)
Design and Structure Training Accountability

Monitoring, Examining, and Evaluating The Results Of The Plans

Indicators and Measures
Actual Losses versus Expected Losses Experience Modifiers
Continuous Tracking Regular Evaluations Adjustments and Upgrades Feedback

Our Markets
Aerospace and Defense
Construction Manufacturing and Distribution Private Family Offices
Recent Success Stories
Recent Success Stories

A Client Had Workers Compensation Losses Double The Industry Average. As a result his premiums had doubled and profits dwindled. We reviewed and made adjustments to the clients loss and safety programs. This ultimately reduced losses to a more acceptable level. We reviewed and implemented a formal process for managing ongoing losses. This process included a formal process for subrogating losses back to the responsible party for reimbursement. In turn this improved the clients actual losses which in turn reduced his net cost for insurance We hired a Nurse Case Manager to better help manage new losses and properly identify First Aid cases thereby reducing reportable injuries to the clients insurer. Clients 2005 Premium $600,000 (Ex Mod 179) Clients 2006 Premium $450,000 (Ex Mod 150) Clients 2007 Premium $250,000 (Ex Mod 95)
Case Study (The Typical Ticking Time Bomb)

Client had same broker for 21 years 110M Distributor Referred by CPA Firm Upset with lack of risk management by current broker Contemplating change of risk manager No consistent risk audit review process for evaluating risk Our review and audit demonstrated Deductibles were too low Client Dramatically Underinsured For Net Income and Property Values Complete building remodel 1 year previously including seismic/earthquake retrofitting No coverage for pollution indemnification assumed in lease agreement at 4 locations No insurance certificate monitoring for product distributors Lack of adequate controls over vendors insurance programs
Risk Management Results

Property limits increased from $47M to $69M Net Income Limits Of Insurance Increased From $12M to $37M General liability increased from $15M to $20M Retained more risk through increased deductibles Transferred pollution indemnification to current carrier at no charge to client Transferred more risk to carrier on earthquake values (including loss of income) by $14M Negotiated with E/Q company to use the seismic engineering report to demonstrate significant decrease in exposure of risk resulting in a substantial decrease in pricing $100,000 Installed insurance certificate compliance monitoring services Implemented formal contract review process with customers, and distributors Results 2006-2007 Premium $825,000 2007-2008 Premium $705,000
Case Study #2
Aerospace And Defense Manufacturer 25M In Receipts New CFO and Executive Team Risk Manager Hired By Private Equity Group CFO not aware of coverage's, or lack of them Our referral source Investment Banker No ongoing review process of risk
Additional Facts Case Study #2

No contract review
Lease of premises indicated building insurance was lessees responsibility
Inadequate limits of insurance for loss of income No product liability for aerospace or defense parts
Client wanted coverage for specific parts
No coverage for international operations or lawsuits brought abroad Workers Compensation Claims historical review showed solid claims performance
Risk Management Results #2

Properly identified limits of insurance deficiency in loss of income resulting in an increase in values from 2M to 10M Properly identified lease terms and conditions to assure compliance with indemnification, and insurance provisions of lease Added specific aircraft product liability and included worldwide coverage for defense, and compensatory damages Changed work comp carriers to industry specific carrier 2006-2007 Premiums $300,000 2007-2007 Premiums $240,000
Our Best Clients

Referred By Senior Advisors and Current Customers Revenues From $20M Up Known or Unknown Problems With Risk Looking to Upgrade Advisors Not aware of current loss problems
Current Targets
Private Equity Groups Plastics Manufacturers and Distributors Machine Shops Food Manufacturers and Distributors
3 Lead In Questions For Your Clients

How Often Do You Assess Risk In Your Business?
What Did The Last Assessment Demonstrate? Did The Assessment Highlight The Hidden Value In Managing Risk Differently?
Audience Questions

Hidden Profits Risk Management

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Finding Hidden Profits Through The Risk Management Process

There Are Five Basic Steps To Risk Management

Colin D. Baird riskmanager@vzw.blackberry.net

Identify The Risk

Monitoring Examine and Evaluate The Results Of The Plans

The Risk Management Process

Analyze and Measure The Risk

Implement The Desired Action and Plan

Control and Finance The Risk

Colin D. Baird riskmanager@vzw.blackberry.net

Identify The Risk

Colin D. Baird riskmanager@vzw.blackberry.net

A Few Examples of Identifying

Logical Classifications Of Risk

Analyze and Measure The Risk

Insured Losses Uninsured or Unintended Losses

Benefits of Contractual Transfer of Loss Potential

Additional Insured Provisions Subrogation Potential and Cost Recovery Methods

Colin D. Baird riskmanager@vzw.blackberry.net

Control and Finance The Risk

Colin D. Baird riskmanager@vzw.blackberry.net

Implement The Desired Action and Plan

Implementation Commitment and Participation

Design and Structure Training Accountability

Monitoring, Examining, and Evaluating The Results Of The Plans

Continuous Tracking Regular Evaluations Adjustments and Upgrades Feedback

Recent Success Stories

Colin D. Baird riskmanager@vzw.blackberry.net

Recent Success Stories

Colin D. Baird riskmanager@vzw.blackberry.net

Case Study (The Typical Ticking Time Bomb)

Risk Management Results

Colin D. Baird riskmanager@vzw.blackberry.net

Additional Facts Case Study #2

Risk Management Results #2

Our Best Clients

Colin D. Baird riskmanager@vzw.blackberry.net

3 Lead In Questions For Your Clients

Colin D. Baird riskmanager@vzw.blackberry.net

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