A vision of election risk management

THE next national elections in 2022 promise to be the most important in a generation and will dictate the future of this country. As a risk manager and insurance practitioner, I cannot help but apply the risk management process and relate key insurance principles to elections and draw relevant lessons that I would like to share with you.

The Risk Management Process (RMP), as taught to insurance newbies, is simplified but summarizes its most important aspects. Let me dive right in and illustrate the benefits of using the process to manage the myriad of risks these elections present to us both in the electoral process itself but more importantly in the outcome of these elections. .

Faced with the pervasiveness of risk, we need to develop a well thought-out plan to manage those risks. And in the insurance world, that includes four simple steps which, whether used alone or together, are supposed to manage and control these risks, making them acceptable to the bottom line if not managed. The four methods of risk management are risk avoidance; prevention or reduction of losses; Risk retention; and finally, risk transfer. However, before using these methods, it is first necessary to apply the three stages of risk management which are: risk identification; risk assessment and measurement; and finally, the selection of the risk management method (RHM) itself.

We need to be able to identify that risk, the risk being the possibility that something goes wrong. Is it a moral hazard, is it a physical risk, is it a liability risk? Knowing what the risk is will dictate which risk management method or combination of RHM is best to use. Having identified the risk, we should then assess the chances of such a risk occurring as well as the extent of damage or loss if that risk occurs. Finally, knowing what the risk is, the chances of it happening, its magnitude and how far the negative results can go, we can then make an informed decision on which risk management method or which combination of these methods to use. .

Let us take on the task of choosing the best candidates. By following the procedure outlined above for each of the elected positions at stake, we first identify the risks and the extent of damage that each candidate can cause if elected (risk identification). Then, we measure the chances that these risks will occur if this candidate is chosen as well as the chances that this candidate wins (risk measurement and evaluation). Based on the responses, we can then choose the most appropriate risk management method or combination of methods to use.

We can avoid the risk, that is, we do not vote for the candidate that we deem the most risky in terms of foreign relations, rule of law, experience, education, experience and history, even of religious beliefs or any chosen criteria. use.

We can try to prevent or reduce the chances of it happening. This can be difficult on an individual basis, but you can still join like-minded groups with similar advocates and actively participate in their activities.

We may choose to retain the risk if the risky attributes are small and have no overall consequences.

Or we can choose to transfer the risk to another party (i.e. through insurance). This is where it gets tricky and self-limiting, as not all political risks are easily transferable or insurable. In terms of political risks, only certain acts of government or government leaders can be insured, or more precisely, the effects of their acts can be insured. Examples include expropriation, force majeure, regulatory changes, legal risks, etc. Insurance policies designed to address this include, but are not limited to, all industrial risk coverage, expropriation coverage, political violence coverage, arbitration award coverage, denial of justice coverage, among others. These are highly specialized coverages that require careful assessment and negotiation with the insurer. In other words, you cannot count on insurance to cover these risks unless you are a conglomerate, filthy rich and able to afford such a product.

This leaves us with practically only three risk management methods to use when using PMP in choosing a candidate. We avoid the rotten, we try to reduce the negative effects by putting safeguards in everything – from poll watchers to cyber experts – to guard against cyber manipulation or have an army of truth warriors to counter the misinformation and fake news, among others. Finally, we select the right candidates based on our assessment and campaign and vote for who we can be sure we’re the best!


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