Frequently Asked Questions

1. Is ISO 31000 recognized by law?

 ISO 31000 is the international consensus risk management standard and it has been adopted by dozens of countries as their national standard. Some countries, such as Australia, New Zealand, Canada and many European nations, have legislated  various risk management requirements into law while recognizing ISO 31000 as their country’s standard.

2. What is ISO 31000?

ISO 31000 is intended to be a family of standards relating to risk management codified by the International Organization for Standardization. The purpose of ISO 31000:2009 is to provide principles and generic guidelines on risk management. ISO 31000 seeks to provide a universally recognized paradigm for risk management practitioners and companies employing risk management processes to harmonize the myriad of existing standards, methodologies and paradigms across industries, subject matters and regions.

3. What is "risk"?

Historically, "risk" has been associated with taking chances to make gains.  It has also been associated with potential failure and losses.  However, "risk" is defined as "the effect of uncertainty on objectives", whether these effects are positive or negative.  In simple terms, risk management according to ISO 31000 is a discipline for making better decisions taking into account the uncertainties inherent in life in order to better achieve our objectives.

4. What are some benefits to owning a Captive Insurance entity?

Some of the benefits of owning a captive insurance company include:

-Forces the business to focus on sound risk management practices, ultimately improving upon loss prevention techniques

-Save money on traditional insurance costs

-Ability to administer and settle claims on your own terms

-Ability to choose your own legal counsel

-Flexibility to draft your own insurance policies, custom-tailored to fit the exact needs of the company

-Cover risks otherwise exposed, as opposed to self-insuring those risks

-Creates a unique (and sometimes more comprehensive) asset protection strategy

-Accumulation of assets in reserves and suplus, with a portion of those assets being available to the business owners

-Offers certain tax advantages

For more information about Captive Insurance, contact us. . .

5. What is bonding or surety?

A party that guarantees the performance of another.  The contract through which the guarantee is executed is called a surety bond.

6. What is a Certificate of Insurance?

A document providing evidence that certain general types of insurance coverages and limits have been purchased by the party required to furnish the certificate.

7. What is Captive Insurance?

An insurance company that has as its primary purpose the financing of the risks of its owners or participants.  Typically licensed under special purpose insurer laws and operated under a different regulatory system than commercial insurers.  The intention of such special purpose licensing laws and regulations is that the captive provides insurance to sophisticated insureds that require less policyholder protection than the general public.

8. What is the risk management process?

The process of making and implementing decisions that will minimize the adverse effects of accidental business losses on an organziation.  Making these decisions involves a sequence of five steps:  identifying and analyzing exposures to loss, examining feasible alternative risk management techniques to handle exposures, selecting the most appropriate risk management techniques to handle exposures, implementing the chosen techniques, and monitoring the results.  Implementing these decisions requires performing the four functions of the management process:  planning, organizing, leading, and controlling resources.

9. What is risk management?

The practice of identifying and analyzing loss exposures and taking steps to minimize the financial impact of the risks they impose.  Traditional risk management, sometimes called "insurance risk management", has focused on "pure risks" (i.e., possible loss by fortuitous or accidental means) but not business risks (i.e., those that may present the possibility of loss or gain).  Financial institutions also employ a different type of risk management, which focuses on the effects of financial risks on the organization.  For example, interest rate risk is a bank's most important financial risk, and various hedging tools and techniques such as derivatives are used to manage banks' exposure to interest rate volatility.

10. What is Insurance?

A contractual relationship that exists when one party (insurer) for a consideration (premium) agrees to reimburse another party (insured) for a loss to a specified subject (the risk) caused by designated contingencies (hazards or perils).