A comprehensive risk management program is an essential component to any type of business. Analyzing potential risks and the likelihood for them to materialize will assist in creating effective decision making in terms of projects, financials, and security. Therefore, obtaining a Risk Management Insurance Program will ensure that these operations are protected. In order to properly identify and manage risks, consider the following recommendations.
Identifying the risks associated with the business is the first step. These can include, but are not limited to, human error, structural, political, financial, procedural, and reputational threats. Next, evaluate the impact of the threats in the event they were to take place. Multiply the cost of the risk and the probability of the event to obtain the risk value.
Next, it is important to set up practices to properly manage the risk. If the risk is too great, it might be wise to avoid it altogether. This could mean backing out of a business opportunity or foregoing a risky action. Or, another option would be to share the risk with other partners. Splitting liability between other parties can be a successful and less stressful way to manage or take on potential threats.
Lastly, controlling the risk is the next step. This can be achieved with preventative action and detective action. Preventative action involves aiming to prevent a high-risk situation from happening and detective action involves identifying the points in a process where something could go wrong, and then putting steps in place to fix the problems promptly if they occur, says Mind Tools.
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