Jim Gloriod has 19 years of experience working in insurance, 12 of which have been with Aon. He currently serves as the resident managing director of the St. Louis office of Aon Risk Services. Gloriod specializes in helping companies in the energy and construction industries manage their risks.
Q. How can a company analyze the risks it faces?
As far as analyzing the risks that a business faces, risk identification is a really important thing. Companies have to look at not just the frequency of events but also the severity of events. What are some things that could reasonably happen to a business that could (cause) some kind of catastrophic loss? You really have to use a blue-sky approach. You really need to take a step back and take a fresh look at the risks an organization faces.
Q. How can a company create a risk management plan?
I think most organizations probably have at least the basic framework in place right now. If they don’t, they should talk to a risk management adviser to put a plan in place. I think there are two things that relate to the plan. One is making sure the plan is refreshed on at least an annual basis. The other thing is to run a drill or a simulation where you have to utilize the plan. So if you have a business continuity plan that envisions one of your plants going down and operations flipping to another plant on a temporary basis, you run a simulation to find out what scenarios work well, what doesn’t work well. By doing that, you can learn a lot about your plans and how effective they can be.
Q. How can risk management help the bottom line?
When you’re looking at the risks that your organization faces, the real question is whether you want to retain that risk or transfer it to a third party, either contractually or through purchasing insurance. If you look at where the insurance marketplace is today, with prices really at historic lows, more and more organizations are making the decision to transfer risk in order to help their bottom line.