What is a Risk Manager Anyways?
One of the titles we use in our business is "Risk Manager". What exactly does this person do? The first step in our process is to identify the risks to your organization. This is a complex process which requires us to get to know your business in depth. Risks can come in many forms: flood, loss of income due to a fire or other loss, loss of data, contractual losses, financial loss, reduced productivity of employees due to low morale, fines from Regulatory agencies, accidents and disasters from natural causes.
The basic tenets of Risk Management say that there are four ways to deal with a risk once it has been identified.
a). Transfer the risk- pay a premium to the insurance company and they take on the risk. This is typically how fire insurance works.
b). Avoid the risk- discontinue the activity that puts your business at risk. An example of this would be an Inn located on a mountain to discontinue winter sledding as one of their activities in order to avoid possible injuries.
c). Accept the risk- continue the activity knowing that it is uninsurable (or choosing not to insure) and being willing to accept any potential consequences. Some people may choose not to purchase earthquake insurance because they feel the risk of earthquake is low, so they accept this particular risk.
d). Reduce the risk- this involves putting controls in place to reduce the probability of risk. For instance, installing a sprinkler system in a building reduces the damage due to fire.
Most insurance agencies are very good at identifying insurable risks and transferring the risk to the insurance company for a premium. Today, there are a number of insurance agencies that equate "managing risk" with "managing safety" and employ methods such as reducing employee injuries, thereby reducing workers' compensation costs. These safety measures include making sure your organization has updated safety handbooks, an onsite safety training program and is OSHA compliant.
Lastly, there are extremely rare agencies that can address insurance concerns, safety concerns and also employment related risks to your organization. A growing threat to businesses today, is the risk of incurring an employment related claim. Even if the risk has been insured, a claim of this type could greatly reduce company profits through decreased employee morale as well as bad publicity for the company. There are many ways to reduce your risk from this type of claim. A company can implement policies and procedures that clarify how disputes will be handled. These same policies will assist the company in defending against claims regarding harassment and EEOC (Equal Employment Opportunity Commission). Some companies think they can decrease their liability by outsourcing their HR functions. However, EEOC and harassment are civil violations which mean that both the company owners and supervisors can be held personally liable. That is a responsibility that can't be outsourced.
Clark-Mortenson Insurance has the ability to tackle all of these risks and management strategies. We feel that viewing your organization as a whole and providing you with the tools you need to protect yourself is the best way help your organization Be Ready For Anything.