A lot has Been Written About Lessons Learned, but how soon we Forget…

Lessons LearnedI read an article that suggested that Risk Committees/ Governance Committees etc are particularly naïve about the potential for a Lessons Learned regime to:

–       identify Risks as they arrive; and

–       mitigate them before they become a serious problem.

It is my own experience that there are additional bottom line profits being generated from lessons learned.

With a great team of insurance claims experts as part of the LMI Group, they are all encouraged to pass back the lessons learned from every claim they attend by commenting on risk management learnings, problems with the insurance coverage etc. This is collected by the Group’s Chief Knowledge Officer who transfers the information to the relevant LMI eSevice (our on-line research and comparison sites), as well as to all our claims and risk management team, so they can then pass on the learnings to our customers. I do the same by incorporating important lessons into my training sessions.

Not everyone takes this approach. A few years back, a major organisation had a large loss arising out of one of the natural catastrophes. The Insured found they were under insured to the tune of $50+ million dollars. As a result, they realised they needed someone with the correct skills to act in the important role of Manager of Risk and Insurance.

The Insured, in turn, engaged me to do a complete review of their insurance program and a full Business Interruption Sum Insured/Declared Value review. This resulted in the Declared Value and Limit of Liability being trebled. As an aside, the premium went up by a much lesser amount.

Once a year, I would make contact with the Risk and Insurance Manager and we would discuss what changes the organisation had gone through and what changes (if any) needed to be made to the program. My tailored template for the business interruption calculations was used each year by the Risk & Insurance Manager and I would double check the logic and calculation.

Last week I revisited the client to find that the organisation had completed a restructure and, as part of the cost cutting, had retrenched the Risk and Insurance Manager and reallocated the role of insurance officer to an accounts payable clerk. This, in a business with billions of dollars of assets and huge revenues.

It will not be long before the existing program will be out of date and when this does happen, the business will be back in the same position with a huge contingent liability hanging over their heads.

I went away shaking my head in disbelief at the short term mentality and lack of understanding at what is at risk for all the stakeholders of the organisation, by not heeding the lessons learned from the not too distant past.

Of course, it is not just the big end of town that make such decisions. How many of us see the losses arising from natural and man-made disasters night after night on television and think it will never happen to me! That only happens to other people. What if it did? How would your risk, business continuity and insurance programs stack up?

I personally learned a lot about the benefits of lessons learned for LMI from Ian Fry of Knoco Australia . I met Ian more 10 years ago when I needed someone to bring PolicyComparison on line. He did a great job then and still does in his chosen area of expertise of knowledge management and lessons learned. I end with Ian’s details should any one wish to learn more from the master.

ian

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