IT IS a fine balance - how to cover as much risk as possible without it costing you the earth, according to Roland Raath, m.d. of Cargocare.
Insurance is insurance, he said. However much you are prepared to take on yourself lessens your premium.
The new strategy in the industry is to take a holistic approach in achieving that balance between insurance and risk management, Raath added. Each area of risk being analysed and controlled.
As a first step, your debtors have to be secured. Here, Raath told FTW, you either have an asset (controlling the cargo, for example) or you go for a credit guarantee policy. The insurers will assess how good your operational control and systems are, he said, and how much you are prepared to pay.
For freight movement and marine insurance of cargo, Raath added, one tip is to take a serious look at your carriers. Less than 10-year-old vessels, complying with all the ISM clauses, will obviously lessen your cost of cover.
With cheap services and cheap vessels, you are taking more risk. A situation where you will pay more.
Internally, protection is also gained from having your management guaranteed for quality under an ISO (International Standards Organisation) standard. Back this up, said Raath, with errors/omissions insurance to cover any failure in your system.
With debtors and errors/omissions covered, Raath feels that you would be running a tight ship.
But, he said, this still leaves other areas of risk which also demand specialised care - currency and foreign exchange, for example.
Here you must balance foreign exchange risk and cover.
Summarising his policy, Raath said: Ensure that you are financially sound - with credit guarantee and foreign exchange cover; and that you are operationally sound - marine insurance for the cargo along with errors/omissions cover.
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