With the retirement of the risk manager for this $5 billion, publicly traded technology components manufacturer, management decided to transfer in-house risk management from operations to a treasury team function.
Given concerns that the in-house team no longer had the time or resources to effectively manage the function, outside consultants were called in. Since the company’s private equity owner had previous experience with Risk International and our ability to successfully improve bottom lines, the decision regarding outsourcing was an easy one.
Although the manufacturer was not aware of any specific problems with its current risk management portfolio, it had a history of closely monitoring costs and was continually looking for opportunities to grow margins. The Risk International risk management team conducted a full TCOR analysis and identified a number of opportunities to significantly reduce overall costs through running a competitive broker RFP and remarketing all lines of insurance.
The competitive bidding process and insurance remarketing resulted in a savings of $850,000 in the first year alone, even though the incumbent broker ultimately retained the business. Over a three-year period, total savings exceeded $3.5 million. Specific cost-saving changes to the program included changing insurance carriers where needed, updating the D&O coverage and pricing, adjusting deductibles and retentions, lowering collateral, changing types of collateral, aggressively managing claims, implementing a Risk Management Information System (RMIS), implementing a property risk control program, and integrating insurance programs from acquired entities. Additionally, Risk International was able to achieve many coverage enhancements across the lines of insurance. As a result of the significant bottom line results in year-one, Risk International transitioned into a full outsourcing role and has continued over the past several years to manage the company’s risk management program.