The trick is to see that the resulting income is greater than the initial out go. The answer is nothing. That's right, nothing. And that fact makes risk a peculiar expense-a parasite, so to speak. The costs of managing risk offer no demonstrable, measurable return.
Risk sucks away assets from the business entity like so many leeches and gives nothing back.
Imagine the annual report of Acme Widgets boasting the speed, efficiency and low cost associated with the payment of its liability claims, or the particularly good deal it got on its business interruption cover, or the quality of its employee relations fostered by its friendly handling of workers' compensation. The best that can be said of well-managed risk is that it could have been worse but wasn't. The tools for combating the risk parasite have evolved, but it all started with retaining risk. In the beginning, the risk manager debated the pros and cons of risk retention and developed effective analytical tools to address that debate. A never-ending stream of new exposures arose like so many heads of the Hydra that had to be analyzed, understood and contained.