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Cost of Loss

Reading Time - 2 min


Why you should spend 2 minutes reading this:

What is the value of something? Understanding value, will help focus your team and protect your bottom line from large 10%+ losses from key contracts.




Not all your insurances are created equal. So then, who do you focus on?


You could take several approaches to this (encounters, revenue, etc.) and there likely won't be a perfect solution. Sometimes small contracts matter due to relationships that aren't captured in data. 


This article will focus on one way you can rank your contracts, view it as a starting point.


The question you could ask yourself is:

If we lose this contract, what will be the impact to our bottom line? 


In order to answer this per contract, you will need to follow a few steps:

  1. Understand your cost structure

  2. Apply that cost structure to your contract rate

  3. Adjust for the size of the contract


We've built a few tools to help you form a quick understanding/output of this process. If you would like to use them make sure to fill out the form at the bottom of this page and we will send them over. 


High-level actions you can take based on this article:

1. Develop the analytic capabilities to understand the value of each contract

2. Refine your contract management processes to prioritize your critical accounts

3. Decrease stakeholder risk for your largest accounts 

4. Develop game plans for worst-case scenarios for largest accounts

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