Definition:

The cost-of-risk ("COR") concept was developed in 1962 and today is defined as the sum total of all risk management costs as applying to three exposures; property, tort liability and occupational disease or injury. Within these three exposures are six types of costs: insurance premiums; retained losses; internal administration; outside services; financial guarantees; and fees, taxes, and other similar expenses.

The COR is then expressed as a dollar amount per $1,000 of revenue. Using this as a standard means of comparison, an organization can track their COR from year to year and be able to measure themselves against others within their industry.

Service to be provided:

Pinnacle will develop your COR in accordance with the above definition. We will then compare your COR to your peer group based upon SIC Code as published in the most recent RIMS Benchmark Survey. Please note that this widely recognized publication expresses COR as a dollar amount per $1,000 of revenue. Therefore, our peer comparison will use revenue as a standard variable.

Why should such a service be considered?

In determining such a cost, you will be able to track and trend your cost from one year to the next. Further, in determining a connection to some variable such as revenue, it allows for a more reliable forecast.