Traditionally, account directors and executives have thrown in a risk management service as an inducement to the client when quoting for the transactional business. Nothing wrong with this, surely? Well, for a start the risk management component is rarely based on professional estimates by the risk management consultants themselves and so is usually both misdirected and inadequate for the amount of work the client actually needs – and will probably expect. The risk management consultants are then pressured into trying to do 20 days work in ten – in effect skimping. Not much due diligence and attention to good governance here from the very same people who tell clients it is so vital. Alternatively, the breakdown of work during the year is not costed, not monitored and not controlled, thus resulting in brokers' risk management functions probably running at a low margin or even a loss.
In the wake of the Turnbull Report, these quite extraordinary hallowed practices will have to stop. The professional approach (if only to reduce errors and ommissions exposures) requires the risk management consultants to be writing the proposal, identifying the skills required and making the estimates for the work they will have to deliver.
Clients will need to be weaned off their addiction to free risk management from the broker and realise that there is no such thing as a free lunch. Transactional fees and risk management consulting fees need to be separately budgeted by the client. Brokerage fee transparency is, in any event, a long overdue requirement.
Revitalising health and safety
The Department of the Environment, Transport & the Regions, in conjunction with the Health & Safety Commission has published its strategy for revitalising health and safety at work. This is a refreshing departure from previous HSC strategies over the past 26 years, following the Robens Report in 1972 and the Health & Safety at Work Act in 1974, in that it takes a more business-oriented approach rather than focusing on a lot of technical issues.
Although carrying forward much of the Robens self-regulatory concept, the strategy sets specific ambitious targets for reduction in work-related deaths, ill-health and injuries which currently cost the British economy some £18bn per year. A ten-point strategy is backed up by a 44-point action plan.
If you are anything like me, you get heartily fed up with the way important-sounding terms get thrown into almost every conversation, document and conference paper when it is clear that the users do not have a clue what these terms mean. Examples of my pet hates are “holistic”, “integrated”, “strategy”, ‘balanced score card' and “management system”.
Such terms are often hijacked from particular disciplines where they have precise meanings but, when misused, the wrong and even the opposite meaning may be conveyed. Take “holistic”, for example. It is frequently used by the ignorati to mean comprehensive (for full discussion see my book Practical Systems Thinking as detailed on my website awa.demon.co.uk. Rambling policy statements entitled “strategy statement” are commonplace.
Impressive buzz words are all part of the contemporary inflation of language in society when common colds are called flu, headaches are called migraines and being fed up is depression.
Insurance brokers are now styling themselves as risk management experts as if to hide the reality of their transactional core business. Let's challenge fraudulent piffle whenever and wherever we can.