How to Choose, Use, But Not Abuse a Risk Management Consultant: II

If you decide you need a consultant, follow these steps to get your money’s worth:

Define the scope of work and the problems you want solved. You might want a complete audit of your organization’s overall risk management program, or you might want the consultant to look at only certain facets of it. Be specific so that the consultant can focus on your needs.

Assemble pertinent information. Gather enough information about your organization to allow the consultant to prepare a responsive proposal. Such information might include:

• An annual report, SEC form 10K, or other descriptions of the organization’s activities.
• Summary of loss information, insurance coverages, and any special funding arrangements.
• List of major facilities, organizational charts, product brochures, etc.

Request for Proposal. Create a written request for proposal (RFP) and send it to one or more reputable consultants. You can obtain assistance in finding consultants from such trade organizations as Risk & Insurance Management Society (www.rims.org), Society of Risk Management Consultants (www.srmcsociety.org), or from experienced risk managers. Also, Business Insurance (www.businessinsurance.com) publishes an annual listing of consultants.

• Your RFP should ask consultants to provide a general list of clients and the names of contacts at five or more organizations familiar with the proposed consulting project team. In addition to speaking with these references, call other clients on the consultant’s list, particularly those in the same business as your organization. Be sure to find out who actually performed the work, as well as the client’s opinion of its quality, practicality, and timeliness.
• Request copies of articles and papers written by the consultants. Although copies of a consultant’s actual work provide the best indication of their creativity and communications skill, many clients are reluctant to release studies to outsiders and a good consultant will respect the clients’ desire for confidentiality. Therefore, you might not get to see the consultant’s best work.
• Ask the consultant whether they perform work for — or receive income from — insurers, brokers, third-party claim administrators, or other entities that provide insurance or risk management services. The answer will disclose whether the consultant has any conflicts of interest that might affect their objectivity.

Compare the consultant’s written proposals. Review and evaluate each proposal carefully. Some good questions to ask yourself are:

• Is the proposal responsive to the RFP? Is there anything in the RFP that the consultant neglected to address in the proposal?
• Do you agree with each consultant’s perception of the problem? Are the objectives, scope of work, plan of action, and personnel clearly defined?
• Do you understand exactly how the consultant charges fees? An estimated fee, not to be exceeded without your prior approval, lends itself to many situations.
• Are any submitted sample articles, papers, and reports clear, easy-to-understand, and free of "boilerplate?" The ability to communicate clearly is often as important as technical expertise.
• Do they provide a breakdown of estimated time that each member of the consulting team will spend on the project?
• Will they submit interim billings regularly so that you have a record of work as it’s done?
• Are necessary travel plans well defined to avoid unnecessary consulting time and expenses? Some consultants bill for travel time, some don’t.
• Are the number and types of reports and presentations clearly stated?

Personal Interview Process. Once you’ve reviewed all of the proposals, arrange to meet the consultants who submitted the best proposals. During the interview process, try to reach conclusions about the consultants, using the following questions as guidelines:

• Is the consultant energetic and enthusiastic?
• Does the consultant speak in a way that commands attention? Do they project confidence in posture, eye contact, and overall appearance?
• Does the consultant speak clearly and strongly, in language that your organization’s employees and officers will understand? Can the consultant explain complex concepts in a simple manner?
• Does the consultant exhibit the assertiveness and diplomacy necessary to work effectively with your organization’s people?
• Does the consultant appear to be committed to excellence and honesty in all dealings?
• Does the consultant demonstrate the knowledge needed to handle the project effectively? Do they understand your problems and propose a reasonable approach to finding solutions?

You won’t answer these questions easily or quickly. The written proposals and personal interviews alone won’t give you all the information you need. Pay special attention to each consultant’s reputation for quality and integrity, and check references carefully. The consultant’s track record is probably the best indication of how they might perform for you. Also ask the consultant to identify their areas of greatest expertise and greatest weakness. You might learn much about the consultant from the way they answer this question.

HOW TO GET THE BEST RESULTS FROM YOUR CONSULTANT

Once you’ve decided on a consultant, there are several things you should do to get the most from their work and your money:

• Schedule adequate time to meet with the consultant. Be certain you’re available when the consultant is in your office.
• Don’t leave the consultant in a vacuum. Provide any information the consultant needs promptly.
• Arrange interviews and travel schedules to use the consultant’s time most effectively. Make sure that all individuals who the consultant will interview are available when the consultant is on site.
• Impose reasonable time constraints. Be sure your organization can hold up its end of the assignment (and deadlines). Remember that you must meet the consultant’s information needs before the work can proceed.
• Let the consultant know how much documentation you require in their reports. Do you expect every recommendation to be supported with the exact logic used to reach it, or is the bottom line adequate? Will you require a personal presentation of study results? A clear understanding of the number and types of reports and presentations will avoid wasted time and unnecessary consulting fees.
• Determine in advance whether the consultant’s work might require access to confidential material. You might wish to have the consultant sign a confidentiality agreement in which the consultant agrees not to release any information they obtain during the consulting assignment. You might also require the consultant to return at the conclusion of the study all information and work generated during the project.

For particularly sensitive studies involving such things as environmental or hazardous products liability risk assessments, consider going a step further by having the proposed consulting assignment contracted through your attorney. Although this technique isn’t foolproof, this might provide some protection in the event of subsequent litigation.