Risk management is a widely emerging business science known as ERM (Enterprise Risk Management). Captives are merely one sophisticated component of an effective ERM approach to protecting an organization’s interests.
Stakeholders in effective risk management range from business owners to employees, investors, lenders, partners and regulators.
Large companies today often have CROs (Chief Risk Officers), positions rarely seen just ten years ago. A few years ago our managing director collaborated with the CRO for the University of California system to explore how captives could benefit that extremely large public enterprise. All CROs worth his or her salt today need to fully understand captive insurance companies.
Captives are widely recognized by sophisticated risk managers and professionals as an important and integral part of serious enterprise risk management for an increasing number of companies, even increasingly smaller organizations.
According to “Essentials of Risk Management,” a leading book on the subject published in 2006 by McGraw-Hill, risks can be categorized by the following main types of risk, each with many subcategories:
- Market risk
- Credit risk
- Liquidity risk
- Operational risk
- Legal and regulatory risk
- Business risk
- Strategic risk, and
- Reputation risk
To review some of the customized insurance policies we consider when designing a captive to address various risks in many of the above risk type buckets, visit our Risk Assessment section by clicking here.
Explore the information on this site under the risk management section to better understand why and how captives of various types are used to improve risk management today.