Managing claims costs top priority for risk and finance managers: Towers Watson survey

The corollary effects of the global financial crisis – featuring dramatically downsized staffs and reduced budgets – on the total cost of risk is a major concern for corporate risk and finance managers, according to a Towers Watson survey. Retained claims (including claims paid by a captive) are the single greatest concern for risk managers, according to 64% of the 244 finance managers who responded to the survey. Premiums paid to a third party insurer (excluding captives) ranked second in terms of importance, at 49%. Thirty-nine percent said that “other” provider fees, such as brokers, actuaries and third-party administrators (TPA) were at least somewhat important.  The survey also found that 55% of risk and finance managers said their company has a true enterprise risk management (ERM) process in place. Towers Watson reports that prior surveys indicate this percentage was as low as 11% in 2000 and 37% in 2005 and that of the companies having established ERM capabilities, 71% said they have identified and prioritized key risk and have assigned risk owners. According to the survey, of the 45% of companies that currently do not utilize ERM, 37% said that there has been no articulation of the value of implementing ERM, while 27% noted that ERM was too resource-intense and expensive to pursue, regardless of cost.The Web-based survey was conducted in April and May 2010. The participating companies were from a variety of industries, with 69% of them having revenues of at least $1 billion.