FINANCE: Risk Management Makes Sense
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AS most sectors in the economy can attest, business conditions are getting tougher. Hand in hand with this goes increased risk and the most logical action should be for businesses to try and transfer risk from the possibility of it affecting their activities.
So says Guy Jameson, Head of Sales and Marketing at Alexander Forbes Risk Services (AFRS).
Essentially, to ‘transfer risk out’ means insurance, which is very often regarded by many as a necessary evil or even a grudge purchase. There is a perception that the insurance industry often looks for ways not to pay claims. Jameson acknowledges that it is also regarded as expensive, for which one often does not see a return – unless one is unlucky enough to suffer a claim.
Despite these perceptions, insurance remains an important means of protecting ones assets, even more so in an economic downturn. “Even the best managed businesses can suffer major losses that are beyond their control but a suitable risk management programme can prevent or minimise the impact of these losses, lessening the strain on a business”, Jameson says.
To better service the market, AFRS has in recent years followed a segmentation strategy by forming divisions to specialise in specific sectors, staffed with specialist brokers who will undertake a proper evaluation of the risk and exposures and use their expert knowledge in placing the cover correctly.
“This is not only vitally important in the settlement of claims, but will also go a long way towards securing the most suitable cover at a cost effective price”, Jameson says.
He does not use the words ‘cost effective price’ glibly and points out that AFRS is the largest short term insurance broker operating in the Western Cape. “The economies of scale are significant and we can achieve very competive terms as well as coverage, through our influence in the market and our specialist experience in arranging cover for our clients. And we also get better results on the settlement of claims should they occur as the cover is correctly structured and we have staff who have specialist expertise in settling claims”, he says.
“Employing more than 300 staff across various disciplines in the Western Cape, we pride ourselves in being able to offer clients solutions to most, if not all their risk related problems, locally, and apart from our dedicated service teams, we also employ a number of specialists in the Western Cape who are able to respond to clients needs immediately”. Jameson says as the dominant broker in the Western Cape – as it is nationally for South Africa – AFRS has a wealth of experience and depth of resources and consequently has the distinct advantage of specialising in certain industries due to its extensive client base.
“Our Cape Town office has always been extensively involved in the fishing and marine sector, the retail industry, the petrochemical industry as well as the clothing and textile industries, amongst others. We have a number of municipal clients as well”.
“Our Stellenbosch office has been fortunate enough to deal with clients in the wine, liquor and tobacco industries and has extensive involvement in the fruit and farming industries”, Jameson says.
AFRS also has office in George and Oudtshoorn.
“Whilst being the largest broker in the Western Cape has distinct advantages, we also realise and acknowledge the fact that many clients may not feel that ‘bigger is best’. Therefore, by running our business in smaller units and appointing dedicated service teams, we hope to achieve the best of both worlds, by providing clients with a personalised service but with the backing of a large, well respected broker”.
“We also aim to meet with clients needs by agreeing upfront what level of service is required and agreeing on a basis of remuneration that is acceptable to both parties”, according to Jameson.
This will be in respect of the following activities:
• Client service
• Technical broking
• Claims handling
• Claims recoveries
• Risk management
• Risk finance
• Other specialist services.
“AFRS has over the years learned to listen to our clients, getting to know what makes them different and establishing the goals they have in mind. We then design and deliver solutions based on a genuine appreciation of the commercial realities facing clients. Our solutions are aimed at providing a real competitive advantage in an increasingly overcrowded marketplace”, says Jameson.
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