A SAM risk assessment example

Between March and May 2020, we helped an organization improve their SAM risk management rating from a C to an A – and thereby enabled them to reverse the non-renewal notice on the SAM insurance.

We were asked to help an organization overcome the non-renewal notice they had received from their SAM liability insurer. The non-renewal was the result of significant paid and outstanding SAM claims. The standard insurer question “what have you done to prevent recurrence?” was not easy to answer.

We first assessed the current SAM risk management posture of the 20 or so semi-autonomous entities within the organization.  Their average SAM risk management rating when first rated was C; the lowest was below NR (not rated), the best was a B. 

We then cherry-picked the best practices from across all the entities and developed a single policies and procedures document for all the entities incorporating all the best practices.  Our approach to policies and procedures is also to set them within the framework of our SAM risk management system.

All but two of the entities within the organization agreed to implement the changes necessary to adopt the new – to them – system.  The two couldn’t, only because of the impact of COVID on their current activities. When the others finish making the changes to their current approaches, which with COVID to deal with won’t be as soon as would normally be the case, they will all have a SAM risk management rating of A.

Based on:

  • the system we delivered as part of the new policies and procedures document,
  • the information we delivered as part of the assessment, the rating, and the policies and procedures;
  • and the quality of the SAM risk management this organization now has and will continue to have as a consequence of the system,

the SAM insurer not only withdrew their non-renewal, but they also renewed the policy ‘as expiring’.  In June 2020…

The insurer didn’t need to raise the premium because of the reduction in the risk.  The costs to the organization of de-risking cannot be calculated yet but, currently, it seems likely those costs, plus our costs for the assessment, will be less than the premium they saved – just this year alone. 

So, the project has already paid for itself, the organization has materially better SAM risk management and less SAM risk.  And it has SAM insurance.  The insurer now has less risk for the same premium as last year. 

Both insured and insurer are in a far better position than they were before our assessment, rating, and de-risking project.

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