Risk Management and How It Affects Your Insurance Needs
By: Mary Thompson (Capstone Brokerage President) May 26, 2015
Risk Management is a process that involves identifying a company’s risk by an in-depth analysis. Once the risks are identified a business should then try to reduce, eliminate, or transfer the risk. As a business, simply having insurance is not enough. Risk management is a crucial part of a business’s structure. If you don’t know where you have a risk, then how can you properly be protected?
How do I identify potential risks? Well that depends on the type of business you operate. Think about what the potential risks are. All businesses should have some form of Risk analysis completed on a regular basis by an outside company to help identify risks. Here are two situations that require both risk management and insurance:
In the construction industry the highest risk for a business is typically serious injury on the job. As far as risk management is concerned, the first step is to have a strong written safety and training program in place. The next step is to make sure that the program is actually implemented and adhered to. The communication of the program is a key element to help prevent injuries. Most on the job injuries could be avoided by simple training. Insurance protects a business from the financial aspect of injury in the form of worker’s compensation, general liability, and even a business owner’s policy.
In the manufacturing, or product industry, there is a large risk in both product safety and copyright infringement. The obvious risk is product safety which comes to consumer protection. This is why products by companies, such as Fisher Price, go through rigorous testing prior to being released to consumers. The testing is part of risk management. Insurance will protect the business from product defect, copyright infringement, and litigation issues in the form of Product Liability.
Think of insurance as a means to replace a monetary loss. If a building burns down, or is vandalized, property insurance replaces the loss in building funds or asset value. However, there are losses that money simply cannot replace such as failure to recover data from damaged computers – this requires risk management. The protection of data can come in the form of offsite computer data backup etc. While insurance may replace the computer, it can’t replace the data.
Insurance is used to transfer risk by covering the company. Risks that have an automatic need for insurance are product liability, workers compensation, and property ownership. These types of Risks are easily covered in most cases protecting the business. Insurance products serve as risk management tools for a company by allowing them to take on the small negative of having to pay premiums while giving up the potentially large negative impacts of being victim to an uninsured event.
Companies that have a risk management regimen in place will benefit from a lower rate of claims; they are also eligible for lower insurance premiums. Safety programs and safety training can greatly reduce the number of injuries sustained in a work environment.
Categories
- Benefits Resources
- Bonding
- BOP
- Business Insurance
- Commercial Auto
- Commercial Property
- Company News
- Construction
- Crime Insurance
- Cyber Insurance
- Directors & Officers
- Employee Benefits
- Employment Practice Liability Insurance
- Entertainment
- General Liability
- Health Insurance
- Healthcare
- Healthcare Reform
- Homeowners Insurance
- Hospitality
- Manufacturing
- Medical Malpractice
- Mining & Energy
- Nightclubs
- Personal Auto
- Personal Insurance
- Professional
- Restaurants
- Retail & Wholesale
- Risk Management Resources
- Safety Topics
- SBA Bonds
- Security
- Seminars
- Technology
- Tourism
- Transportation
- Uncategorized
- Workers Compensation
Archives
- May 2021
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- November 2018
- September 2018
- August 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- February 2013
- November 2011
- October 2011
- September 2011
- July 2011
- June 2011
- March 2011
- November 2010
- October 2010
- September 2010
- April 2010
- February 2010
- November 2009
- October 2009
- November 2008
- August 2008