This presentation provides a four-step process to help risk managers evaluate an organization's insurance program strategy. The steps include: (1) creating an insurable risks matrix to categorize insurable and non-insurable risks, (2) analyzing a loss register to identify frequent and under-utilized insurances, (3) calculating a loss ratio to assess performance against benchmarks, and (4) using a risk transfer strategy code to determine options like eliminating, reducing, consolidating or creating insurance policies. The analysis of these steps can guide risk managers in adapting an insurance program to an organization's true risk profile.

1. Operational Risk
Risk transfer strategy
Ignacio Reclusa
Risk Management and Insurance
May 2014

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1. Introduction
2. Insurable Risks’ Matrix
3. Loss Register
4. Loss Ratio
5. Risk Transfer Strategy Code
Index

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1.
Insurable Risks’
Matrix
2.
Loss Register
3.
Loss Ratio
4.
Risk Transfer
Strategy Code
• This presentation aims to provide a process which might help Risk Managers to make better informed
decisions about the suitability of the insurance program strategy for the organization.
• This process is set in four steps:
1. Introduction

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• Organization’s risk profile can be split into insurable and non-insurable risks (Insurable Risks’ Matrix):
1.
Insurable Risk Matrix
2.
Loss Register
3.
Loss Ratio
4.
Risk Transfer
Strategy Code
2. Insurable Risks’ Matrix

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• Also, the Loss Register will provide information about what type of insurances and risks are more frequent.
On the flip side, which insurances are under used:
1.
Insurable Risk Matrix
2.
Loss Register
3.
Loss Ratio
4.
Risk Transfer
Strategy Code
3. Loss Register

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• And finally we can calculate the Loss Ratio:
• If the loss ratio is under benchmarking test results, Risk Managers need to analyze alternatives to adapt the
insurance program to the reality of the risk profile.
1.
Insurable Risk Matrix
2.
Loss Register
3.
Loss Ratio
4.
Risk Transfer
Strategy Code
4. Loss Ratio

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• The analysis of the three mentioned inputs (Loss Ratio, Insurable Risk Matrix and Loss Register) will lead
Risk Managers to understand which coverage is not been used, whether limits are too low or if deductibles
are too high.
• To systematize and structure our analysis we could use the Risk Transfer Strategy Code:
1.
Insurable Risk Matrix
2.
Loss Register
3.
Loss Ratio
4.
Risk Transfer
Strategy Code
5. Risk Transfer Strategy Code

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• The Risk Transfer Strategy Code provides a simple way of generating five basic alternative directions
when setting the insurance program.
5. Risk Transfer Strategy Code
Risk Transfer Strategy Code (RTSC)
Eliminate This action is focused on detecting what policies do organizations underwrite in that
should be eliminated because the organization is not facing those risks any more or
because they are mitigated by other means.
Reduce Manager need to identify what coverage or insured capitals do organization invest
their money in that should be reduced well below their current level.
Penetration By this means the organization use existing policies with its existing coverage,
deductibles and limits for other business units. It builds on existing insurance
program.
Consolidation Consolidation is where organizations focus on current risks with current policies.
Create Organizations deliver modified or new coverage to existing policies. It can also
consider reducing deductibles, increasing limits o adapting insured capital.

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Brief Bio
International Risk Management & Insurance Consultant /
SME, with over 13 years of experience in the industry.
I have a broad experience in helping organizations step up
to their true potential. Uniquely positioned to talk about
operational risks and how to turn productivity into a healthier
organization.
I have lectured to professional groups and business
audiences.
Ignacio Reclusa
Risk Management and Insurance
M +34 677 023 800
www.ignacioreclusa.com
ignacioreclusa@gmail.com