Aon launches Cost Reduction Initiative
LONDON.- As global companies demand ‘quick wins’ in the face of capital constraints and expected insurance premium increases, Aon Global Risk Consulting is launching a Cost Reduction Initiative for EMEA businesses to help drive down their total cost of risk.
Whilst every business will define its total cost of risk in its own way, all are ultimately aimed at measuring the fundamental cost that risk represents for a business and should include: the cost of retaining risk, the cost of transferring risk (through instruments such as insurance) and the expenses associated with risk management.
Aon’s new initiative aims at lowering the cost of risk and therefore promoting a more efficient use of capital by targeting:
· Short term cost reduction through insurance programme optimisation
· Liquidity release from historical self-insurance structures, such as captive insurance vehicles
· Loss prevention initiatives
· Accelerated claims closure
· Outsourcing of risk management services to Aon
· Development of metrics to measure and control the cost of risk.
Rory Moloney, head of Aon Global Risk Consulting in EMEA, said: “Increasingly we are being asked to support clients in realising ‘quick wins’ in the area of cost reduction or liquidity creation. To achieve this we have formed a cross discipline response team who use a holistic review process and transparent metrics to identify such opportunities.”
Charles Winter, head of risk finance at Aon Global Risk Consulting, added: “In a difficult economic climate, it becomes even more imperative to ensure that your risk management and risk financing strategies support the business by driving down the cost of risk both on a strategic and tactical basis.
“Re-aligning risk financing programmes with the business’s needs and eliminating inefficiencies can result in real cost savings. If, at the same time, improvements in loss prevention can be realised through, for example, the reduction of accident rates, the savings can be significant.”
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