AIM cheat sheet
AIM · Keep the key ideas within reach.
Management and Leadership in Risk Management and Insurance
Management controls complexity through planning, budgeting, and staffing; leadership copes with change by setting direction and aligning people.
Five bases of power: legitimate (position), reward, coercive, expert, and referent (identification with the leader).
Situational leadership matches style to follower readiness: telling/directing for low readiness, selling/coaching, participating/supporting, delegating for high readiness.
Risk management process cycle: identify exposures, measure frequency and severity, select treatment (avoid, retain, control, transfer), implement, monitor, and review.
Total cost of risk = premiums + retained losses + deductibles + risk control and administrative costs + risk transfer fees.
Expected loss = frequency (claims per exposure unit) x average severity; use it to compare retention against transfer costs.
Risk map (likelihood x impact) prioritizes exposures into four quadrants: high/high requires immediate treatment, low/low requires monitoring only.
Authority and accountability must align: delegating a task without decision authority creates role ambiguity and erodes accountability.
Span of control widens as tasks become routine and standardized; narrow spans suit complex, high-risk, or non-routine work.
Leading in an Evolving Risk Environment
Enterprise risk management integrates risk across silos; ISO 31000 stages are scope/context, risk identification, analysis, evaluation, treatment, and monitoring/communication.
Three lines model: first line owns and manages risk, second line provides oversight and compliance, third line (internal audit) gives independent assurance.
Black swan characteristics: rare, high-impact, and retrospectively predictable; fat-tail events make historical averages unreliable.
VUCA framing: volatility, uncertainty, complexity, ambiguity - each calls for a different leadership response (flexibility, information gathering, systems thinking, experimentation).
Kotter's eight steps begin with urgency and coalition building and end with anchoring changes in culture; skipping early steps undermines later ones.
Risk appetite is the amount of risk an organization accepts in pursuit of objectives; risk tolerance is the acceptable variation around that appetite.
Climate and cyber risks are systemic and correlated, so diversification across traditional insurance lines provides limited protection.
Scenario planning tests strategy against multiple plausible futures rather than a single forecast, reducing overconfidence in point estimates.
Leading through disruption requires psychological safety so staff report emerging risks early rather than concealing them.