Published August 14, 2013 • 1 minute read
A recent RIMS Benchmark Survey showed that the total cost of risk has increased 5% year-over-year. The survey included more than 50% of Fortune 500 organizations and concluded the total cost of risk has increased to $10.70 per $1,000 of revenue.
The reasons for the increase in cost of risk include loss severity, global catastrophes, and rising premiums. (1)
So what does this mean for your organization? Its simple; as long as the cost of risk continues to outpace inflation, businesses will need to be more efficient in how they budget for their risk programs.
To avoid the cost of rising premiums and claims, an ounce of prevention is always a key ingredient in any risk management strategy.
Properly screening vendors to ensure they have safe work histories, are properly insured, and will not have their legal status of independent contractors challenged in the event of an insurance claim or subsequent tort litigation is vitally important.
To have an effective risk management program, an organization must proactively review each of those factors when hiring any vendor.
Failure to do so dramatically increases risk of loss or claim, which will lead to an increase in the cost of risk and even tighter budgets for that organization.