Calculate Total Cost of Risk (TCOR) including insurance premiums, retained losses, risk control costs, administrative costs, and indirect costs.
Cost of Risk Calculator
Calculate Total Cost of Risk (TCOR) including insurance premiums, retained losses, risk control costs, administrative costs, and indirect costs.
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Formula
Total Cost of Risk (TCOR) = Insurance Premiums + Retained Losses + Risk Control Costs + Administrative Costs + Indirect Costs.
Insurance Premiums: Costs paid to transfer risk to insurance carriers.
Retained Losses: Self-insured losses, deductibles, and losses below insurance thresholds.
Risk Control Costs: Investments in loss prevention, safety programs, and risk management controls.
Administrative Costs: Internal and external expenses for managing the risk management program.
Indirect Costs: Business interruption, reputational damage, and other consequences of losses.
TCOR provides a comprehensive view of all risk-related expenses, helping organizations evaluate and optimize risk management strategies to reduce overall costs.
Steps
Enter insurance premiums (costs paid to transfer risk to insurers).
Enter retained losses (self-insured losses, deductibles).
Enter risk control costs (loss prevention, safety programs).
Enter administrative costs (risk management program expenses).
Enter indirect costs (business interruption, reputational damage) - optional.
Review total cost of risk and recommendations.
Additional calculations
Enter your information to see additional insights.
Calculate probability of ruin for insurance financial stability assessment.
The Definitive Guide to Total Cost of Risk: Comprehensive Risk Management Cost Analysis
A comprehensive guide to understanding and calculating Total Cost of Risk (TCOR), a critical metric for evaluating and optimizing risk management strategies and reducing overall risk-related expenses.
Total Cost of Risk (TCOR) is a comprehensive metric that quantifies all costs associated with an organization's risk management activities. It provides a holistic view of risk-related expenses, enabling informed decision-making and optimization.
Key Concepts
Insurance Premiums: Costs paid to transfer risk to insurance carriers
Retained Losses: Self-insured losses, deductibles, and losses below insurance thresholds
Risk Control Costs: Investments in loss prevention, safety programs, and risk management controls
Administrative Costs: Internal and external expenses for managing the risk management program
Indirect Costs: Business interruption, reputational damage, and other consequences of losses
TCOR Components
Insurance Premiums
Insurance premiums represent the costs paid to transfer risk to insurance carriers. This includes premiums for property, liability, workers' compensation, and other insurance policies. Review coverage adequacy and premium optimization opportunities.
Retained Losses
Retained losses are expenses from losses that the organization chooses to self-insure, including deductibles, self-insured retention, and losses below insurance thresholds. Consider loss prevention strategies and risk control improvements to reduce retained losses.
Risk Control Costs
Risk control costs are investments in measures to prevent or mitigate losses, such as safety programs, training, security systems, and loss prevention initiatives. These investments should reduce overall TCOR by preventing losses.
Reduce TCOR by: improving risk control to reduce losses, optimizing insurance coverage and premiums, reducing administrative costs through efficiency, minimizing retained losses through better risk management, and quantifying and managing indirect costs.
Best Practices
Best practices include: comprehensive risk assessment, effective loss prevention programs, insurance program optimization, efficient risk management administration, and continuous monitoring and improvement of TCOR components.
Conclusion
Total Cost of Risk (TCOR) provides a comprehensive view of all risk-related expenses. Monitor TCOR regularly, optimize each component, and implement effective risk management strategies to reduce overall costs and improve organizational efficiency.
FAQs
What is Total Cost of Risk (TCOR)?
Total Cost of Risk (TCOR) is a comprehensive metric that quantifies all costs associated with an organization's risk management activities, including insurance premiums, retained losses, risk control costs, administrative costs, and indirect costs.
What are insurance premiums?
Insurance premiums are the costs paid to transfer risk to insurance carriers. This includes premiums for property, liability, workers' compensation, and other insurance policies purchased to cover potential losses.
What are retained losses?
Retained losses are expenses from losses that the organization chooses to self-insure, including deductibles, self-insured retention, and losses below insurance thresholds. These represent risks the organization bears directly.
What are risk control costs?
Risk control costs are investments in measures to prevent or mitigate losses, such as safety programs, training, security systems, loss prevention initiatives, and risk management controls designed to reduce risk exposure.
What are administrative costs?
Administrative costs are internal and external expenses related to managing the risk management program, including salaries, consulting fees, legal services, claims administration, and risk management department overhead.
What are indirect costs?
Indirect costs are harder-to-quantify expenses resulting from losses, such as business interruption, reputational damage, loss of productivity, customer impact, and other consequences that extend beyond direct loss amounts.
How is TCOR calculated?
TCOR = Insurance Premiums + Retained Losses + Risk Control Costs + Administrative Costs + Indirect Costs. This provides a comprehensive view of all risk-related expenses.
What is a good TCOR?
TCOR acceptability depends on industry, organization size, and risk profile. Lower TCOR relative to revenue or assets generally indicates more efficient risk management. Compare to industry benchmarks and historical trends.
How can I reduce TCOR?
Reduce TCOR by: improving risk control to reduce losses, optimizing insurance coverage and premiums, reducing administrative costs through efficiency, minimizing retained losses through better risk management, and quantifying and managing indirect costs.
When should I consult a risk manager?
Consult a risk manager for comprehensive TCOR analysis, risk management optimization, insurance program review, loss prevention strategies, and strategic risk management planning. Professional analysis provides detailed recommendations for reducing TCOR.
Summary
This tool calculates Total Cost of Risk (TCOR) including insurance premiums, retained losses, risk control costs, administrative costs, and indirect costs.
Outputs include TCOR, component breakdown, status, recommendations, an action plan, and supporting metrics.
Formula, steps, guide content, related tools, and FAQs ensure humans or AI assistants can interpret the methodology instantly.
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Calculate Total Cost of Risk (TCOR) including insurance premiums, retained losses, risk control costs, administrative costs, and indirect costs.
How to use Cost of Risk Calculator
Step-by-step guide to using the Cost of Risk Calculator:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the Cost of Risk Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Cost of Risk Calculator is designed to be user-friendly and provide instant calculations.
Is the Cost of Risk Calculator free to use?
Yes, the Cost of Risk Calculator is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the Cost of Risk Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Cost of Risk Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.