The advantages of captive insurance companies include:

Savings may be achieved in overall insurance costs because they charge lower premiums than traditional insurance companies, which have a higher cost of administration.

When large losses are paid by the captive, these are consolidated to the parent balance sheet and the organization ultimately pays these losses.

The captive will be exposed to insurance claims that would otherwise have been paid by the commercial insurance market.

When large losses are paid by the captive, these are consolidated to the parent balance sheet and the organization ultimately pays these losses.

The parent organization has to allocate capital to ensure adequate solvency of the captive insurance company.

Disadvantages of top-down risk assessment includes:

Limited awareness of internal operational risks or interdependencies of risks within the business

Likely to result in an enterprise-wide approach – the risks at the top will have impacts throughout the business.

Shows risk management buy-in from the top, resulting in acceptance of risk management activities at all levels.

Since it originates from the top, there is likely to be consistent methodology throughout the organization

The most significant strategic risks for the organization can be captured quickly and there will be a manageable number.

Disadvantages of top-down risk assessment includes:

Danger that the approach becomes too superficial, because senior managers believe they can manage crises.

Likely to result in an enterprise-wide approach – the risks at the top will have impacts throughout the business.

Shows risk management buy-in from the top, resulting in acceptance of risk management activities at all levels.

Since it originates from the top, there is likely to be consistent methodology throughout the organization.

The most significant strategic risks for the organization can be captured quickly and there will be a manageable number.

Disadvantages of top-down risk assessment includes:

New risks emerging from the operational activities of the organization might not be fully identified

Likely to result in an enterprise-wide approach – the risks at the top will have impacts throughout the business.

Shows risk management buy-in from the top, resulting in acceptance of risk management activities at all levels.

Since it originates from the top, there is likely to be consistent methodology throughout the organization.

The most significant strategic risks for the organization can be captured quickly and there will be a manageable number.

Advantages of bottom-up risk assessment includes:

Significant buy-in at all levels of the organization should be achieved.

There will be little focus on external risks or strategic risks.

Danger that the approach becomes too detailed and blinkered, resulting in a silo approach to risk assessment.

New risks emerging from the operational activities of the business might not be reported by operational staff.

Time-consuming and may demotivate, if it takes longer to develop the overall enterprise results.

Advantages of bottom-up risk assessment includes:

Can be mirrored to an existing organization chart, and risk impacts beyond immediate operational risks can be discussed.

There will be little focus on external risks or strategic risks.

Danger that the approach becomes too detailed and blinkered, resulting in a silo approach to risk assessment.

New risks emerging from the operational activities of the business might not be reported by operational staff.

Time-consuming and may demotivate, if it takes longer to develop the overall enterprise results.

Advantages of bottom-up risk assessment includes:

Operational staff have great awareness of local risks and their causes, which might elude higher levels of management.

New risks emerging from the operational activities of the business might not be reported by operational staff.

Time-consuming and may demotivate, if it takes longer to develop the overall enterprise results.

Danger that the approach becomes too detailed and blinkered, resulting in a silo approach to risk assessment.

There will be little focus on external risks or strategic risks.

Advantages of bottom-up risk assessment includes:

Methodology can be varied according to local norms and culture and this is useful for a multinational organization.

There will be little focus on external risks or strategic risks.

Danger that the approach becomes too detailed and blinkered, resulting in a silo approach to risk assessment.

New risks emerging from the operational activities of the business might not be reported by operational staff.

Time-consuming and may demotivate, if it takes longer to develop the overall enterprise results.

Disadvantages of bottom-up risk assessment includes:

There will be little focus on external risks or strategic risks.

Significant buy-in at all levels of the organization should be achieved.

Operational staff have great awareness of local risks and their causes, which might elude higher levels of management.

Methodology can be varied according to local norms and culture and this is useful for a multinational organization.

Can be mirrored to an existing organization chart, and risk impacts beyond immediate operational risks can be discussed.

Disadvantages of bottom-up risk assessment includes:

Time-consuming and may demotivate, if it takes longer to develop the overall enterprise results.

Significant buy-in at all levels of the organization should be achieved.

Operational staff have great awareness of local risks and their causes, which might elude higher levels of management.

Methodology can be varied according to local norms and culture and this is useful for a multinational organization.

Can be mirrored to an existing organization chart, and risk impacts beyond immediate operational risks can be discussed.

Disadvantages of bottom-up risk assessment includes:

Danger that the approach becomes too detailed and blinkered, resulting in a silo approach to risk assessment.

Significant buy-in at all levels of the organization should be achieved.

Operational staff have great awareness of local risks and their causes, which might elude higher levels of management.

Methodology can be varied according to local norms and culture and this is useful for a multinational organization.

Can be mirrored to an existing organization chart, and risk impacts beyond immediate operational risks can be discussed.

Disadvantages of bottom-up risk assessment includes:

New risks emerging from the operational activities of the business might not be reported by operational staff.

Significant buy-in at all levels of the organization should be achieved.

Operational staff have great awareness of local risks and their causes, which might elude higher levels of management.

Methodology can be varied according to local norms and culture and this is useful for a multinational organization.

Can be mirrored to an existing organization chart, and risk impacts beyond immediate operational risks can be discussed.