Value

Return on Investment

Your resources are limited. You need services that will provide substantial multiples of return. With Risk Alternatives, you will gain clarity, peace of mind, and predictability. You will increase the financial value of your organization. And you will protect and build your firm’s reputation.

Gain Clarity, Peace of Mind, and Predictability

With Risk Alternatives, you gain confidence that comes from awareness and planning.1 As famed guerilla marketer Jay Conrad Levinson explained, great “entrepreneurs realize routine leads to sanity, so they create systems for work activities, rarely going the hit-and-miss route or making things up as they go along. Those systems increase the lifespan of the business while eliminating shoddy work practices, clarifying life and business for employees and associates.”2 Effective risk management strategies, proper governance, and strong compliance systems increase your confidence in your organization.

Increase Financial Value

Risk management, proper governance, and effective compliance drive financial results in at least five ways: they capture cost savings,3 reduce catastrophic losses,4 lower insurance costs,5 reduce the cost of capital,6 and increase the value of your organization.7

Build and Defend Your Organization’s Reputation

A leading public relations consultancy found in 2013 that businesses around the world are trusted by only about 58 percent of their customers.This means that for every ten of the potential customers you’re trying to reach with your messages, more than four don’t trust you.8 That same consultancy found that “when a company is distrusted, 57 percent of people will believe negative information after hearing it just one or two times. Conversely, when companies are trusted, 51 percent of people believe positive information about the company after hearing it just one or two times.”9

In other words, an organization’s reputation is critical to its success. As Berkshire Hathaway Chairman and CEO Warren Buffett noted, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

With effective risk management, governance, and compliance, you can increase the visibility of opportunities and threats and take steps to meet those risks. You earn trust and avoid costly mistakes that can undermine your organization’s future.


Sources:

  1. See KPMG Advisory, “Placing a Value on Enterprise Risk Management,” at 1 (2009) (”
    Good ERM programs enhance company value through reduced costs, decreased variability of financial results, enhanced market reputation, and improved business decision-making (i.e., no surprises).”) [available at http://www.kpmg.com/PT/pt/IssuesAndInsights/Documents/erm22432PHL.pdf]; see also Global Association of Risk Professionals, “The GRC Value Proposition” at 1 (February 2013) (“GRC can not only help mitigate risks and ensure compliance, but also drive business value and profitability”) [available at http://www.metricstream.com/pdf/articles/The-GRC-Value-Proposition.pdf?aliId=82271957].
  2. Guerrilla Marketing Remix (Entrepreneur Press 2011).
  3. KPMG Advisory, supra n.1, at 4.
  4. See, e.g., How Can I Reduce My Business Insurance Costs?,” Harbor Insurance (“[t]he surest way to control your insurance costs is to use . . . ‘risk management’ “) [available at https://www.hrm.us/business-insurance-costs.html]; Demir Barlas, “Buying Errors and Omissions Insurance for Your Small Business,” About.com Small Business Information (“the vast majority of small businesses can be shut down by a single unfavorable ruling in court”) [available at http://sbinformation.about.com/lw/Business-Finance/Small-business-and-entrepreneurs/Buying-Errors-and-Omissions-Insurance-for-Your-Small-Business.htm].
  5. See KPMG Advisory, supra n.17, at 4; Glenda Wertz, “The Ins and Outs of Errors and
    Omissions Insurance,” Insurance Journal (July 19, 2004) (noting that risk management is a factor in developing insurance premiums) [available at http://www.insurancejournal.com/magazines/features/2004/07/19/44745.htm].
  6. See KPMG Advisory, supra n.17, at 3; Aon Corporation, “Enterprise Risk Management: S&
    P Enhancement White Paper (2008) (noting impact of S&P assessment of ERM in credit decision-making) [available at http://www.aon.com/about-aon/intellectual-capital/attachments/risk-services/enterprise_risk_management_enhancement_white_paper.pdf]; Standard & Poor’ s, “Standard & Poor’ s Looks Further Into How Nonfinancial Companies Manage Risk,” at 2 (June 24, 2010) (noting S&P increasing its reliance on companies’ risk management practices when assessing corporate creditworthiness) [available at http://www.standardandpoors.com/ratings/erm/en/us]; Standard & Poor’ s, “Standard & Poor’s To Apply Enterprise Risk Analysis to Corporate Ratings,” at 2 (May 7, 2008) (same) [available at http://www.standardandpoors.com/ratings/erm/en/us].
  7. See Global Association of Risk Professionals, supra note 1.
  8. Jay Baer, Youtility at 14 (2013), citing Edelman Trust Barometer.
  9. Id. at 14-15.