The Total Cost of Risk (TCOR) is a holistic metric that goes far beyond just your insurance premiums; it represents the sum of all costs associated with managing risk and losses within your business, including retained losses, risk control expenses, and administrative costs. Evaluating TCOR requires looking across the entire business to identify where risk is originating and building a specialized, custom-built strategy to reduce those costs.
Engineered Tax Services (ETS) spends significant time and effort with clients evaluating every piece of their business to understand their full risk exposure and tolerance. By focusing on reducing TCOR, ETS helps clients bring down overall costs, moving beyond simply purchasing insurance, and proactively protecting what they have built with a strategy that includes optimal risk management and a specialized package of coverages.
Total Cost of Risk (TCOR): What Is It?
- Definition: TCOR is the sum of all costs associated with managing and incurring losses in a business. It provides a comprehensive, across-the-board evaluation of financial exposure.
- Components: TCOR includes insurance premiums (the easiest to track) but also:
- Retained Losses: Deductibles, uninsured losses, and loss expenses.
- Risk Control Costs: Safety programs, training, security systems, and engineering efforts.
- Administrative Costs: Costs of internal risk management staff, external consultants, and claims administration.
- ETS Approach: Engineered Tax Services (ETS) works with clients to evaluate every piece of their business to pinpoint the origin of risk.
- Goal: To deliver a specialized package of coverages and solutions that is custom-built for the client's specific risks and risk tolerance, with the overarching goal of reducing the total cost of risk.
