Cost Effectiveness of Risk Management Practices

Despite the increasing importance of risk management in a successful business organization, virtually no research has been undertaken to evaluate the effectiveness of various risk management practices. Through analysis of data obtained from a survey of risk management professionals, such an evaluation has been made and is reported here. Results include the expected effects of lower costs associated with higher levels of retention, increased size, and less risky industries. The relationship of higher costs with the use of a captive, and the ineffectiveness of centralization or use of analytical tools were unexpected.