LUMINOS: Enterprise Risk Management
Oct 1, 2021

Risk. Exactly how would you define it as it relates to your organization? If you were asked to outline all the risks your operations could face over the course of the next fiscal year, what would be on that list? Perhaps a few obvious categories come to mind, such as competitive, economic, legal and applicable compliance risks. Widening the traditional lens, would you think about country, quality or credit risks? Or would you consider exchange rate, raw material availability, reputation and seasonal risks? And could you articulate any negative operational or financial impacts these additional risks might bring to your company? 

 

Modern-day business management encompasses many complicated and diverse activities, processes and procedures. In the context of normal operations, the focal points for traditional risk management usually include all insurable risks. Enterprise risk management (ERM) opens up the landscape to include traditional risks as well as the business risks that cannot be adequately covered by conventional insurance products or policies.

 

The Risk and Insurance Management Society (RIMS®) defines ERM as “…a strategic business discipline that supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio.” They also note many key factors that successful ERM programs include beyond traditional risk management practices:

  • Encompasses all areas of organizational exposure to risk (financial, operational, reporting, compliance, governance, strategic, reputational, etc.);
  • Prioritizes and manages those exposures as an interrelated risk portfolio rather than as individual “silos”;
  • Recognizes that individual risks across the organization are interrelated and can create a combined exposure that differs from the sum of the individual risks; and
  • Provides a structured process for the management of all risks, whether those risks are primarily quantitative or qualitative in nature.

 

Does your institution have a formalized ERM program to document all relevant risks to the enterprise? Is your entity prepared for a sudden, rapid jump in capital borrowing costs due to sharply rising interest rates? Have you modeled the supply chain impacts that could occur the next time a cargo container ship blocks a major global trade waterway, such as the Suez Canal?

 

Have you ever thought about managing all of your ERM risks, processes and action items with your Risk Management Information System (RMIS)?

 

We have. At Gallagher Bassett, we are always thinking about how to merge our claims expertise, intellectual capital and computing technologies with our ecosystem of LUMINOS RMIS tools. Through our partnership with Origami Risk, we have deployed an RMIS solution for our clients and carrier and broker communities that includes a robust Enterprise Risk Management module.

 

Step outside the boundaries of traditional RMIS claim inquiry and transactional loss run reporting. At the individual risk level, manage all relevant ownership and appetite data. Set and track change velocity and vulnerability ratings. Edit action plans. At the macro level, flowchart risk processes, connections and inter-dependencies. Define governance activities. Monitor follow-up tasks and model changes throughout the year. All within our single LUMINOS RMIS data repository, supporting fingertip access to disparate information sets that improve overall productivity and organizational agility.

 

Utilizing our add-on LUMINOS ERM Expanded Service module option is a great economic value proposition for your organization. Think about it. What could you do with an award-winning RMIS product suite bundled together with your TPA claims administration services that includes all applicable organizational risk ERM data? How many potential disruptions could be defined and quantified? And how many unexpected financial losses could be avoided during the next strategic planning cycle?

 

So go ahead. Execute your vision. Let’s work together to take your RMIS tools to The NEXT Level. Interested in learning more about our Enterprise Risk Management module? Or any of the other LUMINOS Expanded Service offerings available to Gallagher Bassett clients through our RMIS product suite? We look forward to talking with you. Please engage a member of our Sales or Client Service teams, or contact Jennifer Turner, SVP RMIS Solutions, at jennifer_turner1@gbtpa.com.

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