An independent risk management consulting organization is a firm that does not sell insurance but provides advice on insurance and other risk management matters for a fee and not in association with the selling of insurance.

The essential value of a risk management consultant's service is its expertise and objectivity. A risk management consultant can be hired either for a specific project or on a continuing basis.

A competent risk management consultant should be able to perform, or advise others in performing, virtually any specific task related to the risk management function of any organization. The following are some of the special projects for which an organization should hire a risk management consultant:

  • studying an organization's loss exposures and recommending an appropriate risk management program,
  • drafting specifications for the bidding of an insurance program and analyzing the proposals received in response,
  • auditing all or some portion of an organization's current risk management activities, much the same way an accountant audits financial record-keeping,
  • conducting a feasibility study of proposals for establishing a captive insurance affiliate or pool or joining a risk retention group.  
  • drafting a risk management procedures manual,
  • designing and/or conducting employee safety training programs, and
  • confirming the recommendations of an organization's own risk management professional to lend more credence to the essentially completed work of that individual.

Any one-time employment of a risk management consultant should be designed to permanently enhance an organization's risk management program, not merely to create a "temporary tempest" of activity that soon ends without any permanent positive effect. A risk management consultant may be compensated through an hourly or daily fee, on a monthly or annual retainer, or on a per assignment basis.

When choosing a risk management consultant, education and experience are reasonably valid indicators of ability, as are references. Approximately one-third to one-half of all the risk management consultants are members of the Society of Risk Management Consultants.  Credentials aside, perhaps the single most important qualification of any risk management consultant is the ability to work and communicate cost-effectively with any given client organization. [This information excerpted from "Essentials of Risk Financing" Volume II, Tiller, Blinn, Kelly & Head, Insurance Institute of America.]

 

 
 

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