Global competitors need global risk management strategies, services and support. But even the largest global players need local expertise and insight as well. 

Hurricane Katrina caused localized supply disruptions along the Gulf Coast, spiking energy prices around the globe and affecting every petroleum user. All businesses and organizations with operations in the Gulf region had to abandon the area for days or even weeks. One corporation that owned a New Orleans hospital was quick in sending relief supplies to the New Orleans airport, but the shipment was held up by red tape and rerouted to another airport. From there, the corporation needed locally based transportation to move it where it was needed.

The lesson? No matter how prepared they are, global competitors continually must evaluate their needs and determine which risk management resources will work best. Regardless of global leverage, a local connection is often imperative to success.

Today’s risk management landscape has a few large public brokers and many mid-sized and small agents and brokers. But there is also another option: networks of affiliated independent brokers.

The benefits of affiliated risk management networks are plenty. Made up of independently owned entities operating in countries and regions around the world, this option can be a smart, safe choice for many risk managers. What follows are some of the biggest reasons why.

Innovation. The entrepreneurship of the affiliated network drives innovation, which drives best practices. Whether a broker is in Peoria, Peru or Poland, how does an affiliated network capitalize on a risk management innovation? The local affiliate allows the idea to take root. Then, it is tested by the needs of the client and the local marketplace and the innovation’s  merits push it forward and outward.

Financial strength. Networks typically choose affiliates based on performance criteria for the owners of those affiliates. The performance criteria include growth and size among other factors. Once chosen, affiliates periodically undergo an in-depth evaluation to ensure they continue to meet stringent qualifications including growth, creativity and professional services. 

Technology. Uniform information technology systems are vital. The advancement of insurance standards has pushed along the development of secure data exchange within and among various entities in the insurance brokerage value chain. The affiliated network can link systems and trade data securely using the open data standards that are driving efficiency in the industry.

Independence and interdependence. An affiliated network is, in effect, a set of interdependent business people working together to meet shared objectives. That model of interdependent businesses is alive and well throughout the business world, not just in the insurance business. Why? It is ultimately good—possibly even better in many cases—for the customer. 

At an affiliated network, the risk manager can either talk directly with the owner of a risk management firm or, at least, know that person’s name and e-mail address. How often does a risk manager meet the owners or leaders of a public brokerage?

An owner-led management team has a strong incentive to serve and deliver. The bottom line for risk managers is that they can ask themselves: Do I want to work with someone with “skin in the game?”

Global reach. As risk management needs exceed the geographic and technical scope of a broker, an affiliated network allows brokers to step beyond their region or service expertise. As an example, one U.S. broker affiliate had a local client with a large forestry products operation in South America. Working with the firm’s affiliates in Argentina and Chile, the owner-brokers built a comprehensive plan to service that client. 

That type of creative, client-driven collaboration occurs regularly in an affiliated network. Independent brokerage firm principals work together as professionals to tie together risk management resources for a client’s needs. Stretching across state, regional and national borders, these mutually beneficial partnerships—formed on merit, competence, client need, creativity and accountability—are viable and attractive options for risk managers. 

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Paul J. Hering, CIC, CPCU, is managing principal and CEO of San Diego-based Barney & Barney LLC, an Assurex Global Partner since 1984. He serves as chairman of Assurex Global, an affiliated risk management network of 117 firms with over 500 offices in some 70 countries.