Fundamentals of Risk Management

Risk strategy
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Role of the risk manager
The typical historical role of the insurance risk manager is set out in Table 22.2. 
Traditionally, the risk manager has been involved in assessing overall risk policy and 
procedures with endorsement from the board. Decisions on insurance risk manage-
ment issues and the provision of statistical analysis of insurance losses have been part 
of these historical responsibilities.
The insurance risk manager needs to evaluate the current status of risk manage-
ment and reflect on the current state of the insurance market. Increases in insurance 
rates and a more sophisticated approach to risk financing have affected the amount 
of insurance purchased by large organizations. In many cases, there has been less 
insurance purchased and this has led to a reduced premium spend and a lower budget 
for the insurance risk management department.
There is no single established reporting position in the structure of an organ-
ization for the risk manager. At present, risk managers may report to human resources, 
the finance director or the company secretary. Sometimes, the risk manager reports 
to the corporate treasurer and, occasionally, the chief executive officer (CEO).
There is still a need for a risk management facilitator and coordinator in most 
large organizations. This will enable the organization to apply risk management 
tools and techniques to a wider range of issues. Risks have historically been divided 
into insurable (pure) and non-insurable (speculative) risks. From a business success 
perspective, these are artificial divisions between types of risks.
The risk manager should be responsible for the corporate learning that has to take 
place so that the organization can understand the benefits of risk management.
As the person having responsibility for the risk architecture, strategy and protocols, 
(RASP), the risk manager will be responsible for developing the strategy, systems and