Risk financing requires planning and arranging for the sources of funds before loss events occur and then directing the funds offered by these sources, post loss, to assure the desired business recovery objectives as met.
While still in early stages of development, our risk financing scheme has emerged over time from constantly trying to interpret University priorities against these questions:
- Is the University taking the right amount of risk?
- Is the University taking the right types of risk to achieve its priorities?
- Is the University being properly compensated for the risks is it assuming?
- Has the University allocated its (financial) resources efficiently given the risks it has assumed?
Commercial insurance is just one of many tools used at Harvard to mitigate the financial impact it business risks – counterparty (contractual) transfers, comprehensive process auditing, business continuity planning, financial hedging, captive insurance, and operational diversification are other approaches often used. Insurance is generally the least efficient of all external funding methods for predictable, well-developed loss events, though its efficiency (ROI) can be improved through the use of prudent contract design and moderate to large deductibles.
The Department’s scope entails all University locations, operations and activities worldwide; the department is here to serve all schools, plus the needs of all designed centers, divisions, and affiliates regardless of how remote and detached from our home just off the Cambridge campus. By utilizing a rigorous approach to first understand the nature of our client’s particular goals, risk appetite, and specific financial targets, we can better collaborate with them to find appropriate risk management solutions that enhance their business objectives.