In recent years, numerous companies have added risk managers to manage their business risks. However, twenty-five years of corporate risk management experience convinces us that many of those same companies could now reduce cost, gain flexibility and obtain a higher level of risk management expertise through outsourcing.

Our analysis indicates that as companies concentrate on their core businesses, their business risks stabilize, and
consequently their need for full time risk management diminishes.

In such environments, the majority of risk management activities occur during a 45 day period each year leaving the risk manager underutilized for the remainder of the year. Numerous other risk management administrative activities fill the remainder of the year which are frequently duplicated elsewhere within the company or by its insurers or brokers.

Some risk managers attempt to expand their responsibilities by becoming more involved with loss prevention and claims management, but lack the skills and experience to be effective in those areas.

The top reasons why companies outsource their risk management function:

• Reduce overloading of finance department staff.
• Provide flexibility of services, only used as needed,
  not full time.
• Have a higher level of expertise and broader risk management skills.
• Eliminate head count, associated overhead, and redundant administrative costs.
• Access broader knowledge of the insurance marketplace and brokerage community.
• Contribute expertise that may not be readily available,
  such as Loss Control and Claims Management.
• Provide objective risk management expertise with no conflict of interest – no affiliations with brokers or insurance companies.