Managing Risk on a Global Level

If you’ve never looked at the U.S. Department of State’s U.S. Passports & International Travel Worldwide Caution report, U.S. Department of State’s U.S. Passports & International Travel Worldwide Caution you should consider giving it a read. Particularly if you are sending staff abroad any time soon, or if you have operations overseas. Warnings about groups that are targeting Westerners, and U.S. citizens in particular, for kidnapping and terrorist attacks are updated regularly.

Managing global risk requires additional planning

kidnapping chart - 1997 - 2012 - Mexico

The Citizen’s Council for Public Security and Criminal Justice (Consejo Ciudadano para la Seguridad Pública y la Justicia Penal, SJP) in Mexico reports that kidnappings there are on the rise.

Growing businesses are always looking for new vendors, manufacturing facilities, or markets and this means key salespeople and executives may be dispatched to locations around the globe. A time of growth is exciting and optimistic, but it is important to keep safety in mind before you send employees out of the country. Mexico, for instance, reports that kidnappings are on the rise.

The State Department maintains an A-Z guide for Americans Travelling Abroad. One tip: Make a photocopy of all of your identification and passports prior to leaving. Another helpful tip: Make sure you’ve notified your credit card companies that you’ll be traveling and let them know what your destination is – credit card companies have updated security measures that automatically detect out-of-the-ordinary transactions and your card could be placed on hold just as you’re handing over your AMEX for that dinner party you’re hosting in Barcelona.

Also check with your insurance company before you say bon voyage to any staff. You want to be sure that they are protected for everything from health emergencies to more serious issues like kidnapping.

If you’re making plans to open an office or facility overseas, you’ll need to do your homework. From working with the appropriate U.S. consulate to calling on your legal and operations teams, you’ll want to be sure your business is set up for success.

Think globally

Even if these trips or offices are very small, take the time to make sure you’re covered for anything. The cost of a catastrophe to your company could be huge if there is loss of property and immeasurable if one of your employees is harmed. If you feel your coverage isn’t adequate to cover everything you’re being advised to cover – or if the coverage you want isn’t offered, consider creating a captive, which could help you get the insurance you need as your business grows overseas, and can grow with you as your international operations reach the “global” level. Contact us if we can help.

managing risk

Managing the risks you take

Talk to a small business owner just starting out or a senior executive at a flourishing company and both will tell you that risk is the essential ingredient to success. It is the element that keeps businesses in front of their competition and the main spark for innovations that change the marketplace.

Seasoned mavericks know that the key to successful risk taking is evaluating risks and making sound business decisions on how to deal with them. That’s where risk management comes in.

Insurance helps with managing risks

Risk management is the art of looking at potential threats to your business and deciding how to deal with them. Options may range from reducing risk through prevention, limiting potential exposure to threats, or implementing controls against perceived threats. But even the most carefully planned businesses can be blindsided at times.

Traditional insurance policies help companies by providing indemnification – or compensation for loss and damages when something goes wrong. Insurance places the insured in a large pool that can reduce the impact of the loss – the Law of Large Numbers at work.

Some businesses, however, find that they need to insure risks that may not be covered in traditional insurance plans. These businesses can form a captive insurance company to formalize self-insured risks and share the potential burden with businesses who face potential issues similar to their own.

Benefits of Captives

By identifying and insuring potential hazards that could have damaging impact – think of a huge explosion that impacts a large community, or the kidnapping of a key executive – the company is protecting itself. The insured events are remote possibilities, and if the loss never occurs, the premiums paid to cover them generate higher profits over time.

Captives offer benefits like cost reduction, more control over settlements, leverage against third-party insurers, and the ability to establish better-than average claim experience. Companies also find captives are a good way to manage cash flow and protect assets.

Increasing certainty

There is no doubt that a sense of bravado and the willingness to explore new frontiers drives business forward. Being prepared for almost everything on the road ahead will help you maintain your lead.