Risk Management – Finance

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Risk Management – Finance

The area of finance may not seem relevant to risks associated with design firms, but this includes borrowing money to meet payroll, investments the firm has made, employee benefit plans, and aging accounts receivables. It is a constant balancing act between project budgets and overall firm financial performance.

1. Average Revenue Per Employee

While it does have limitations, this ratio provides a gauge to a company’s productivity and financial health. The revenue-per-employee ratio provides a broad indication of the health of an operation. A high revenue-per-employee figure indicates that a company can operate on lower overhead costs, and, therefore, do more with fewer employees, which often translates into healthier profits. Discipline-specific benchmarks should be used when comparing your firm’s ratio.

2. Deductible Options

When a claim occurs and a deductible must be paid, this unexpected expense can cut deep into profitability. Cash flow can vary greatly from month to month and while a design firm may appear to be profitable on paper, cash flow dictates the firm’s ability to meet its financial obligations. Properly matching deductibles to a client’s unique cash flow is a critical part of the risk management process. This even includes deductible types, such as straight self-insured retentions to deductibles that include “first dollar” defense coverage.

3. Managing Accounts Receivables

A key component to positive cash flow resides in how the design firm manages accounts receivables. Design firms should collect money within 60 days of the invoice date. Invoices exceeding 90 days must be pursued for a quick resolution. Particularly in down economies when many firms have cash flow issues and draw out their own payments, there is risk in suing clients for the collection of fees. Staying on top of your firm’s average aging of accounts receivables is one way improve cash flow and therefore overall firm profitability.

4. Alternative Risk Management Financing

Risk financing makes funds available to pay for losses and risk control measures or makes up for cash flow variability. Risk financing can be broken down into 2 segments: Retention and Transfer. “Retention” is the risk financing technique that makes funds available from inside the design firm to pay for losses and manage cash flow variability. “Transfer” is the technique in which the design firm shifts financial consequences of specific losses to a 3rd party. This can be done through insurance, contract (indemnification) language and hedging.

Why Choose Risk Specialty Group for Financial Risk Management?

As an independent insurance agency, Risk Specialty Group is committed to providing unbiased financial risk management solutions tailored to your business. We work for you—not a single carrier—offering access to over 20 top-rated insurers to ensure you get the best coverage for your needs.

We only partner with A.M. Best “A” rated carriers reliable financial protection. Whether you need to meet contractual requirements or reduce financial risk exposure, we customize insurance programs that align with your goals and budget, providing competitive options for you to compare.

Industries We Serve

We create risk management solutions for a variety of industries, including:

No matter your field, we provide customized strategies to reduce financial risks.

Types of Business Insurance We Offer

We offer a wide range of insurance solutions to protect your business, including:

And more! We tailor plans to fit your business needs.
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FAQs About Finance & Risk Management

What is finance and risk management?
It’s the process of identifying and handling financial risks, like cash flow problems, unpaid invoices, and unexpected losses, to keep a business stable.
Why is risk management important?
It prevents unexpected financial losses, keeps cash flow steady, and helps businesses stay profitable.
How does the Risk Specialty Group help with risk management?
We offer custom plans for handling cash flow, insurance, and financial risks to keep businesses financially secure.
What are risk financing techniques?

There are two types:

  • Retention: Covering losses with company funds.
  • Transfer: Using insurance or contracts to shift financial risks elsewhere.
How can managing accounts receivable improve cash flow?
Businesses should collect payments within 60 days. If invoices go past 90 days, action is needed to avoid cash flow problems.
What is revenue per employee, and why does it matter?
It’s a measure of how efficiently a business operates. Higher revenue per employee means lower costs and better profits.
How does Risk Specialty Group customize plans?
We assess your financial risks, business needs, and industry challenges to create a tailored risk management strategy.
How does risk management help with cash flow?
By choosing the right deductible and insurance plan, businesses can handle unexpected costs without disrupting cash flow.
What industries do you serve?
We work with design firms, engineers, IT professionals, environmental consultants, construction managers, and more.
How do I get started?
Contact us today for a risk assessment and customized strategy to protect your business.

What Our Clients Say

We don’t believe in one-size-fits-all solutions. We customize risk management strategies to help businesses meet financial goals and avoid unnecessary risks. Check out our reviews to see how we’ve helped companies like yours!

Contact Risk Specialty Group

Struggling with financial risks? Need better cash flow management? We’re here to help. Contact us today for a risk management strategy tailored to your business needs.

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