In order to provide effective and efficient claims handling, a company’s risk exposure also needs to be understood. Through good risk management, risk exposure can be reduced and therefore achieving a company’s objective to reduce claims are more likely to be achieved.
For example, if your objective is to reduce pothole claims, then the cost of bitumen is a potential risk to you achieving this objective. If the price increases then you may not have the budget available to maintain highways and therefore pothole claims may well increase. Monitoring this KRI will help inform your strategic business decisions in order to ensure pothole claims do not increase. It may be more cost effective to increase budget or redistribute funds to improve highways maintenance rather than pay-out on an increase of claims. Alternatively, additional controls could be implemented to help ensure that pothole claims do not increase such as putting signage up to notify pedestrians and drivers of the potholes, closing pathways and offering alternative routes.
Take a look at our Introduction to Key Risk Indicators video to see how JCAD’s Risk Management software, CORE can assist with your risk management and aid strategic decisions based on your risk limit.