Enterprise Risk Management: a National Risk Management & Insurance Strategy for Sierra Leone

Risk management has been defined as the process of identifying and analyzing loss exposures, evaluating the feasibility of risk management techniques to address the loss exposures, selecting and implementing the best techniques and monitoring results, in such a manner that any organization or governmental entity can meet its objectives---minimization of the adverse effects of accidental losses.

It is indeed a truism that the insurance industry can play a very significant and critical role in a nation’s developmental process. In most developed and developing countries, insurance and risk management measures and practices have and continue to provide the bedrock for a sustained modern socio-economic infrastructure in which development and economic growth have flourished.

In the United States of America for example, risk management and insurance not only permeates every facet of economic and social endeavor, ranging from healthcare to governmental contracting, but is the essential engine driving innovation, development, commerce, investments, governance and societal change.

In the Sierra Leonean situation by contrast, the challenge still remains how insurance professionals and governmental policymakers can creatively utilize enterprise risk management principles and insurance techniques in both the public and private sectors to effectuate the country’s economic development and growth.

Through the utilization of enterprise risk management principles, governmental entities and organizations are provided a systematic rigorous approach to managing risk from all sources that threaten their strategic, developmental, socio-economic and financial objectives.

 As a Sierra Leonean insurance professional who over the decades with every major loss either accidental or by design in the country always retorted that insurance would indemnify the losses, whether it was the burning by the rebels of machinery for construction of the Bo/Freetown highway or the destruction of the Sierra Rutile Company’s mining infrastructure, culminating in the recent NACSA and SABABU construction contracts; the realization that our country lacks a national risk management and insurance office designed to ensure that the country recoups indemnification or is held “harmless” in such events is indeed a cause for alarm.

It is thus against this backdrop that we are articulating and advocating the development and establishment in Sierra Leone of a national insurance and risk management strategy office designed to:

• Serve as a repository of all governmental contracts and agreements.


• Provide technical risk management and insurance review of all past, present and future governmental contracts and agreements so that government can recoup damages from past and current insurance contracts.


• Design and introduce innovative new micro insurance products and services.


• Work in conjunction with ministers, permanent secretaries and professional heads of departments in establishing an appropriate and effective risk management system within their ministries to enable them identify risks, analyze risks and mitigate risk exposures, through loss control measures.


• Provide insurance review of all governmental contracts and agreements for compliance with appropriate terms and conditions.


• Provide loss control oversight in all ministries, departments and governmental agencies.


• Protect government owned assets and minimize loss to the government and people.

It is also aimed at initiating and adding a new perspective to the wider debate of how a national insurance and risk management strategy could be utilized in addressing both macro and micro risks and loss exposures inherent in all facets and sectors of the nation’s socio-economic and governance infrastructure.

For an administration composed of insurance professionals in very key strategic positions including the President, Minister of Foreign Affairs, Minister of Employment and Social Security and Minister of Trade and Industry, the need for establishment of such a “National Insurance and Risk Management Strategy” must be a no brainier and should as a matter of urgency be seriously considered in other to effectuate the President’s avowed goal of “running the country like a business“.

The basic law governing the conduct of Insurance in Sierra Leone is the Insurance Act, 2000 which established the Sierra Leone Insurance Commission (SLICOM). Pursuant to section 3(1) of the Act, the commission is charged with ensuring “effective administration, supervision, regulation and monitoring of the business of insurance in Sierra Leone” through the performance and exercise of various statutory functions.

While the Sierra Leone Insurance Commission (SLICOM) and especially the Commissioner has performed a superb job over the years in its regulatory and supervisory functions, the broader insurance industry has however lagged in matching the potentials of its contributions towards national development.

The Act however does not provide for the kind of risk management and insurance oversight envisaged by the establishment of the risk management and insurance office.

As a result of its inability to innovate and increase its capacity and market reach beyond traditional instruments targeting only the formal sector, whose customers are corporations and wealthy individuals, with obligatory products such as motor insurance, the Sierra Leone insurance industry continues failing the nation.

In conclusion, government contracting personnel make daily business decisions about contract risks, insurance, limits, coverage and evaluation of insurance. Providing them with the appropriate tools and resources to assist in making these business decisions is very important for any nation‘s developmental aspirations.