A Stakeholder Approach to Risk Financing Programs

Most businesses that purchase property/casualty insurance design these programs using inappropriate analytical methods that result in inefficient insurance programs. Such programs often provide insurance to reduce variability that does not concern an entity's stakeholders, while offering no protection for the catastrophic losses that do concern them. This paper presents a new approach that orients the insurance program to the entity's overall strategies, and therefore to the key issue that concern its stakeholders. This approach can result in dramatically different programs than those used today.