Why Captives and Enterprise Risk Management Are a Good Idea

Risk Management

When running any business, a level of risk and uncertainty is involved. Likewise, most business owners and management strive to determine how much chance or risk to accept or manage to enhance or erode company assets. This is why enterprise risk captive insurance is vital to the potential growth of your business.

What is Captive?

A captive can be an effective way of maintaining more significant control of risk management and fund self-insured risks. Additionally, a captive insurance company accepts premiums your business may have to pay against a parent company and can profit if those claims are less than the original premium.  A captive can also lower insurance premium costs and provide long-term stability for pricing on customized policy manuscripts.

Benefits of Enterprise Risk Management

Enterprise risk management or ERM is a crucial component of how a captive contributes to your business’s profitability.  Often, a captive consists of a board of highly trained professionals within a variety of disciplines that can also influence your risk management program’s success. Since an ERM  focuses on preventing uncertainty, claims are likely prevented instead of administered, giving business owners a broader understanding of their industry limitations as well.

When you have a captive in place and enforce an ERM, you can ensure effective compliance with local laws and reduce potential risks. Additionally, when you combine enterprise risk management and a captive, it can be vital to your company’s overall growth.

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