In becoming advocates of risk, will this mean underwriters and agents recklessly abandon their traditional role as risk managers? No. It simply means they will account for the full spectrum of risk, rather than an artificially narrow band.

Increasingly, members of the risk management and insurance community are asked to serve as consultants to insureds. Underwriters today do much more than create products through which risk can be transferred. Strong underwriters are also good business people. They see through the numbers and into the possibilities.

Agents and brokers do much more than serve as product conduits. They become strategic advisors and an extension of the insured's management team. Smart executive decision makers will insist on it. More than a trend, it is becoming the norm. Underwriters and agents unwilling or unable to serve as consultants and business people will become relics left with nothing more than stories of the good old days.

By embracing the total concept of risk, underwriters and agents become far more effective in fulfilling an advisory role. Rather than treating risk as a one-dimensional bogeyman, they can help insureds make calculated decisions regarding risk.

Here's a hypothetical case study: The owner of a restaurant realizes his tabletop business has been steadily declining. At the same time, orders for deliveries have been increasing. He surmises this request for deliveries is attributable to the fact he has added online ordering to his customer services. In doing so, he had anticipated customers would pick up their food orders. He had not anticipated an uptick in delivery requests.

The restaurateur now has the choice of incurring additional risk by hiring drivers to deliver food to his customers. Or, he can elect to pass on this business opportunity to completely avoid risk, which stems from home delivery.

Before choosing, he contacts his risk and insurance service provider. Together, they consider the long-term revenue decline if the restaurateur chooses to not add home delivery as a customer service option. The agent, of course, outlines risk transfer options through insurance coverage and other means. He also helps the insured to frame costs of coverage against the opportunity cost that will result from not adding this service option.

Needless to say, most scenarios and business decisions will be far more complex. Yet, the concept will be the same.

Embracing Risk While Transferring It Through Properly Selected Insurance Coverage = Potential Return

It becomes our job as agents and underwriters to explain this concept to insureds, while helping them to understand a powerful truth:

Rather than mere overhead, insurance coverage and risk transfer techniques are a vital engine of productivity. Without insurance coverage, there is hardly any risk that can be safely assumed. New businesses will not be started. Standing businesses will not be expanded. Products that add to human enjoyment and wellbeing will not be launched. Every action that can potentially lead to a profitable return would be abandoned as potentially ruinous. Without insurance coverage the business of man would, by necessity, come to a complete halt. This, of course, would be the greatest cost of all.