Aon launches Risk Financing Decision Platform to reduce total cost of risk by 15%

LONDON.-Aon Global Risk Consulting, the world’s leading risk adviser and insurance broker, is launching its Risk Financing Decision Platform (RFDP) in Europe to help companies save companies up to 15% off their total cost of risk* and justify the risk financing programme to the board. The process will help businesses decide how much risk to retain – through deductibles or captives, for example – and how much to transfer to the insurance markets – to optimise the risk financing spend in the long term.

RFDP uses a three-pronged approach, linking:

* actuarial risk modelling – creating loss models for traditional insurance risks (EL, property and political risks etc) and enterprise risks (supply chain, employees, cyber etc);
* financial analysis – looking into a company’s financial plans to grasp how much risk the company is able to retain and to see how loss scenarios can impact a company’s key performance measures;
* programme design and stress testing – reviewing risk transfer strategies through modelling of the current programme and alternative options, which results in cost of risk savings on a like for like basis.

Following the analysis, companies can view how the total cost of risk could be split differently with cost/benefit analysis for each of the potential insurance options. At the same time, the platform produces a report that can be shared with board to justify insurance decisions and keep in line with corporate governance.

Martin Massey, head of business development at Aon Global Risk Consulting, said:
“We’ve used the platform for over 50 clients in the US and on average, by linking actuarial modelling to company financials and the risk transfer marketplace, we’re seeing our clients save between 5-15% on their total cost of risk.

“The RFDP process helps support the risk manager both in providing a framework to evaluate strategic alternatives but also in justifying to its stakeholders that its risk financing programme adds value and is cost effective.”