Best Practice Companies Best Practice Companies in Risk Management in Risk Management

Craig W. Roggow

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IntroductionIntroduction

Risk management acts as a fundamental Risk management acts as a fundamental element in any company. element in any company.

AIG and AON are excellent model AIG and AON are excellent model companies in risk management. companies in risk management.

The similarities and differences of both The similarities and differences of both firms are examined in this presentation.firms are examined in this presentation.

They have been exceptional in the global They have been exceptional in the global insurance sector.insurance sector.

Objects of this Objects of this ProjectProject

Analyze what these best practice companies do in Risk Management.

Define the similarities between AIG and AON.

Describe major differences between AIG and AON.

Critique AIG and AON best practices. Implementing best practices.

Best Practice Company: Best Practice Company: American International American International

Group (AIG)Group (AIG)

Offers extensive services in risk Offers extensive services in risk management.management.

AIG has a foothold in over 120 countriesAIG has a foothold in over 120 countries The clientele for AIG is highly diverse. The clientele for AIG is highly diverse. Provides competitive premiums for the Provides competitive premiums for the

different risk management products.different risk management products.

Relevance of AIG Relevance of AIG to this Study to this Study

An outstanding company in risk An outstanding company in risk management.management.

AIG’s operational framework is an AIG’s operational framework is an excellent model that exemplifies how excellent model that exemplifies how companies can minimize risk.companies can minimize risk.

AIG has been highly efficient in offering AIG has been highly efficient in offering competitive premiums competitive premiums

AIG uses excellent strategies while AIG uses excellent strategies while seeking reinsurance servicesseeking reinsurance services

Best Practice Company: Best Practice Company: AON Plc.AON Plc.

AON offers both reinsurance and AON offers both reinsurance and insurance servicesinsurance services

Principal insurer of some of the world’s Principal insurer of some of the world’s largest organizations and brands.largest organizations and brands.

Products includes terrorism, political, Products includes terrorism, political, environmental, and database risk environmental, and database risk management. management.

Scope covered by AON ranges from the Scope covered by AON ranges from the aviation sector to higher education. aviation sector to higher education.

Relevance of AON Relevance of AON to this Study to this Study

AON has consistently been profitable.AON has consistently been profitable. The company’s practices can help in The company’s practices can help in

determining suitable types of insurance determining suitable types of insurance for different risks.for different risks.

AON practices provide an excellent AON practices provide an excellent framework for understanding the framework for understanding the effectiveness of different agency effectiveness of different agency systems.systems.

Similarities between Similarities between AIG and AONAIG and AON

Both AIG and AON have global footholds.Both AIG and AON have global footholds. They offer multiple insurance solutions They offer multiple insurance solutions

for numerous industries.for numerous industries. They use the independent and exclusive They use the independent and exclusive

agency systems for marketing.agency systems for marketing. They offer specialty-underwriting They offer specialty-underwriting

solutionssolutions

Differences between Differences between AIG & AONAIG & AON

AON offers extensive brokerage services but AIG AON offers extensive brokerage services but AIG does not.does not.AIG does not offer reinsurance solutions like AON.AIG does not offer reinsurance solutions like AON.AON offers extensive outsourcing services, AIG AON offers extensive outsourcing services, AIG does not.does not.Compared to AIG, Aon plc is a relatively new Compared to AIG, Aon plc is a relatively new company in the global insurance sector.company in the global insurance sector.

Differences between Differences between AIG & AON (cont.)AIG & AON (cont.)

Critique of Best Critique of Best Practices:Practices:

AIG and AONAIG and AON The premium rates offered by both The premium rates offered by both

companies are considerably flexible.companies are considerably flexible. The best-practice companies have also The best-practice companies have also

been effective in the choice of agency been effective in the choice of agency systems for marketing.systems for marketing.

The diversity of risk management The diversity of risk management solutions at AON has greatly cushioned solutions at AON has greatly cushioned the company from potential losses.the company from potential losses.

Implementing Best Implementing Best PracticesPractices

Implementation requires a thorough Implementation requires a thorough evaluation of the different risks.evaluation of the different risks.

The premium rates for different risks might The premium rates for different risks might vary.vary.

It is essential to be covered by a firm that It is essential to be covered by a firm that offers great diversity in terms of risk offers great diversity in terms of risk management solutionsmanagement solutions

The risk management framework must be The risk management framework must be highly flexible.highly flexible.

ConclusionConclusion

AIG and AON are excellent model AIG and AON are excellent model companies in risk management.companies in risk management.

The latter is a British firm while the The latter is a British firm while the former is an American entity. former is an American entity.

These companies are characterized by These companies are characterized by excellent standards of dynamism in risk excellent standards of dynamism in risk management.management.

.

Blog PostBlog Post

For a full report on this project please visit For a full report on this project please visit my blog post: my blog post: http://mergerandacquisitionstrategies.org/best-practice-companies-in-risk-management/

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emerging emerging marketsmarkets, IMF Publications: Washington DC. , IMF Publications: Washington DC. Rejda, G. E. (2011). Rejda, G. E. (2011). Principles of risk management and Principles of risk management and

insurance,insurance, 11th Edition. Prentice Hall: Upper Saddle 11th Edition. Prentice Hall: Upper Saddle River, River, NJ.NJ.

Roggow, C. (2013). Best Practice Companies in Roggow, C. (2013). Best Practice Companies in International International Business. Retrieved from: Business. Retrieved from: http://mergerandacquisitionstrategies.org/best-practice-http://mergerandacquisitionstrategies.org/best-practice-companies-in-irisk-management/companies-in-irisk-management/

Sullivan, G. (2006). Sullivan, G. (2006). Risk management: Safeguarding Risk management: Safeguarding company company assets,assets, Thomson Learning: Boston, MA. Thomson Learning: Boston, MA.

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