Only by understanding the Total Cost of Risk (TCOR) can businesses make informed decisions about how to manage the exposures they face and avoid underinsurance.
However, there are still misconceptions about TCOR, and most people assume it refers to insurance premiums alone, but by recognising all of the costs, you can implement strategies to reduce them.
TCOR is calculated using a business’s insurance premiums, direct costs, indirect costs and risk management expenses.
By learning about TCOR, you can understand the crucial role it plays in allowing decisions to be made about the trade-off between self-insurance, insurance and risk management investment.