John P. Barrett is the resident managing director of Aon Risk Insurance Services West Inc. and oversees the company’s Los Angeles and Irvine offices. Barrett joined Aon in 2007, after spending more than 20 years at Marsh Risk and Insurance Services, where he began as a casualty account executive.
Q. Why is risk management important today?
The desire to take risk and the ability to understand risk is fundamental to how the global economy functions. Companies need to take on risk in order to innovate, explore and expand. A company needs to ask, what are the upsides and downsides of risk? A progressive company will use enterprise risk management to align with a consulting company to determine the complexity of the risk. The world is very small, and one event on the other side of the world can impact your business here.
Q. What types of insurance should companies carry?
The kind of insurance needed depends on the kind of business. Every business has its unique exposures and unique risks. Companies need the basic compliance insurance, such as workers’ compensation, and they will need general liability and maybe directors and officers (insurance). Look at the unique exposures within your company. Based on those individual risks that are special to your company, then you can go out and look for insurance to cover those areas.
Q. How should a company view managing its risk?
The most successful companies today and the most progressive are looking at ways from the enterprise risk process to manage their risk. Risk is part of their world. And, in order to compete efficiently, they have to manage that risk. They’re looking to keep control of capital and that will help them in the future to innovate and explore. When companies are much more progressive in ways to manage risk in a global economy, that puts them in much better spot to keep away from any unforeseen surprises down the road.