You can help control the cost of your insurance premiums and improve your business operations by adopting risk management strategies. Risk awareness and mitigation activities can add up to a safer workplace as well as positive brand recognition.
What Is Risk?
Risk, in insurance terms, is the possibility that a loss or other adverse event may potentially interfere with an organization’s ability to fulfill its objectives. Risk is also an event for which an insurance claim may be submitted.
Why Manage Risk?
Regardless of the size of your business, risk management strategies are essential because:
- People are now more likely to sue in the event of even a minor occurrence. Taking the steps to reduce injuries could help in defending against a claim.
- Courts are often sympathetic to injured claimants and often give them the benefit of the doubt.
- Organizations as well as individuals who give professional advice are held to very high standards.
- People are more aware of the level of service that they can expect, and the recourse they can take if they have been wronged.
- Corporate and non-profit organizations are often being held directly liable for the actions of their employees, volunteers and directors and officers.
- Big businesses are perceived as having deep pockets, many assets and high insurance policy limits. Corporations are sometimes targeted with inflated or fraudulent claims.
Insurance and Risk Management Can Help Improve Business Operations
Insurance is also a valuable risk-financing tool. Few organizations have the reserves or funds necessary to take on all risk themselves and pay the total costs following a loss. Purchasing insurance, however, is not a complete risk management plan.
A thorough and thoughtful risk management plan is the commitment to prevent harm. Risk management also addresses many risks that are not insurable, including brand integrity, potential loss of tax-exempt status for volunteer groups, public goodwill and continuing donor support. By integrating risk prevention activities into your annual operations plan, you may improve efficiencies and increase capacity.
Bottom-Line Benefits of Managing Risk
Risk management provides a clear and structured approach to identifying risks. Understanding all known and anticipated risks allows an organization to measure and prioritize them as well as take the appropriate actions to reduce the potential for losses. An organization with an effective risk management plan in place can also:
- Save resources such as time, assets, income, property and people
- Protect its reputation and public image
- Prevent or reduce legal liability and increase the stability of operations
- Protect people from harm
- Protect the environment
- Enhance its ability to prepare for circumstances that could interrupt business
- Reduce liabilities
- Assist in clearly defining insurance needs
While it’s not possible to eliminate all potential risks, a risk management plan demonstrates your organization’s commitment to loss reduction and prevention. Ultimately, it can make your organization a better risk to insure. Talk to one of DPM Insurance Groups licensed brokers for specific advice about coverage and risk management best practices that suit your business needs.
Source: Insurance Bureau of Canada