Risk managers of retail businesses are broadening their definition of what constitutes risk to include the fallout of Draconian cost-cutting measures, as well as problems with suppliers and other vendors following a brutally disappointing holiday sales season, expert say.

With the recession continuing to shrink consumer demand, risk managers may be able to maintain or even lower insurance costs despite reports of a hardening commercial lines market, as retailers reduce their store outlets, inventory and headcount, according to Len Churnetski, manager director of the retail industry practice at Aon Consulting.

Indeed, closing stores and laying off employees can yield immediate premium “release,” he said–with lower payrolls translating into less risk for workers' compensation, commercial auto, general liability and property exposures, Mr. Churnetski explained.

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