Minimizing costs is one of the main objectives in developing a risk management and insurance program. This involves reducing or eliminating risks wherever possible, as well as determining whether certain risks can be assumed by your business, either through self-insurance or higher insurance policy deductibles. Thorough risk assessment plays a key role in cost-effectively protecting your business with risk minimization measures and sufficient insurance coverage.
Some risks are more easily reduced than others. For example, with respect to your business’s building and grounds, fireproofing and sprinkler systems should help reduce potential fire damage, and a good entry alarm system should help lower your company’s theft exposure. Other risks, such as vulnerability to a lawsuit, may be more difficult to control.
While the cost involved to reduce any risk should be compared to the cost of the potential loss created by that risk, more and more business owners are recognizing that workplace safety and employee safety education are key aspects of an effective risk management program. In the face of increasingly complex safety issues and unique or specific concerns, many business owners are turning to professional risk management services to develop programs that will help ensure regulatory compliance.
In addition to conducting independent on-site reviews, one attractive feature of such professional services is that they relieve the business of the burden of trying to keep up with regulatory changes imposed by different agencies. Furthermore, by providing employee safety training, regulatory updates, and continuing support, a risk management program can help a business respond to changing safety concerns in a timely manner.
The type and size of your business, the liability exposures specific to your operations, and the various costs involved should guide your risk management decisions. Whether you work with a professional service or develop your own set of strategies, your insurer should be one of the key players in the process since many risk exposures are most cost-effectively covered by insurance.
As your business grows, it is important to modify and update your program to help prevent unnecessary loss. Former coverage may not satisfy your current needs. Regular reviews can help make your overall risk management program as cost-effective as possible. Loss control measures should be reflected in reduced claims. When payout costs for claims are reduced, those savings are very often reflected in lower insurance premiums.
The ultimate goal of any risk management program is to control the costs associated with various risk exposures. By proceeding according to the standards of your industry, you will have the peace of mind that comes from operating a safe workplace, and you will be able to focus on the business aspects of running your business.