After having identified and evaluated our client's risk and tried to eliminate or reduce the probability of loss, we enter the area of risk financing. At this time we advise our client whether to assume or transfer the risk. The determination of complete or partial assumption of risk is based on the data that has been compiled and the loss projections that by this time should have been estimated.

Insurance is the most expensive way of financing risk. When designing a risk-financing plan, our philosophy is that insurance is the last resort to be considered. It should be bought only when self-retention is not viable.

If this is the case, then when the risk is assumed over an adequate base, we always recommend that a self-insured, formal program be established by the client. That means that all claims are accounted for as accidents and not as part of its operational expenses. Accidents can be avoided while controlled operational expenses for the most part, cannot. In addition to helping the client determine the retention capacity level, we assist him in setting up the system to maintain adequate records.

After risk assumption has been considered, we are left with several options of risk finance. Some are through post-loss financing arrangements and others through risk transfer before the loss. For risk transfer, there are many options which will be considered such as Traditional Insurance, Retrospective Rating Plans, Finite Risk Insurance and Excess Coverages. These can range from the very simple to the very complex depending on the size and characteristics of the enterprise involved.

Risk financing, including insurance, is a very complex aspect of risk management, rich in options and combinations. It would be too idealistic on our part to pretend to define how to proceed on a particular risk financing plan for a given enterprise we are not familiar with.

Nevertheless we can point out some of our activities in the risk financing area. These include the following:

• Preparation of complete underwriting specifications with plans, appraisals, photographs, experience, etc.
• Evaluation of funding options
• Preparation of bid documents
• Design of insurance programs including design and modification of insurance contracts.
• Verification of premiums quoted
• Supervision of self-insured plans
• Pre-qualification of insurance carriers
• Negotiation of insurance coverages
• Audio-visual presentations to interested underwriters
• Verification of premiums, audits, claims and other materials received from underwriters.
• Assistance in negotiating claims

In conclusion, we serve as the risk manager of the client when none exists and assist the risk manager when one is in place.