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Total Cost of Risk (TCOR)

Every organisation faces a range of risks which can be managed in a variety of ways, such as transfer via insurance, acceptance, avoidance and mitigation. Most organisations however, do not understand the scale and cost of existing risk management activities.

What is a Total Cost of Risk (TCOR) review?

Many organisations do not fully understand the full cost of their risk management activities (which are often substantial) and some even struggle to define what these activities are.

A TCOR review helps organisations understand the full extent and cost of all risk management activities, including any hidden and unintuitive expenses.

A better understanding of the true cost of risk management helps align risk mitigation activities with strategic objectives.

What are the benefits?

A TCOR review helps organisations understand existing risk management measures as well as the associated costs. The benefits include:

  • A reduction in risk management costs
  • Increasing efficiencies
  • Alignment of TCOR with turnover
  • Increased visibility and understanding of risk management activities
  • The ability to track and monitor costs

What will a TCOR deliver?

Many factors can affect the cost of risk management. A TCOR review will identify all components of risk management activities, together with associated costs, over a historical period (typically three years).

In our experience, many organisations are surprised about some of the risk management activities they are undertaking or not undertaking.

Where possible, Willis Towers Watson specialists will forecast how the individual components might change, the reasons why and how that can affect costs. Examples of components include:

  • Threat landscapes
  • Risk appetites
  • Mergers and acquisitions
  • Different insurers
  • Changes to organisational structure
  • Insurance claims
  • Financial flows

Contact us:

For further details please contact your local Willis Towers Watson office.

Total Cost of Risk (TCOR) Review factsheet:


A retail-clothing organisation procures garments from factories across the globe.

It has:

  • A network of logistics and distribution centres
  • A large fleet of vehicles
  • World-wide retail outlets; some owned and some franchised
  • 100,000 employees; mixture of permanent and contractors
  • Variety of legal jurisdictions requiring compliance

The organisation has number of insurance policies including property, public liability, motor, business interruption, directors & offices (D&O) liability and kidnap & ransom (K&R).

It has a team of risk managers, insurance staff and a dedicated business continuity department. It has deductibles on its insurance policies and a bad claims history.

The questions perplexing organisations like this include:

  • As a percentage of turnover, how much should be spent on managing and treating risk? Is that too much or too little?