Risk management in the insurance business is a bit of a head scratcher. On the one hand, insurance companies are selling what many people consider to be a risk mitigation. On the other hand, insurance companies themselves face a variety of risks they need to mitigate.
Let’s briefly consider a misconception about insurance as it pertains to risk management. Too often, people think insurance is a sufficient, catch-all control activity. But while insurance is a perfect way to protect a business from many risk scenarios, there are other scenarios insurance just can’t cover. Oftentimes, insurance does not cover the core competency of a business.