Risk Management is a Process of Identifying exposures and Determining Treatments. (Insurance is only one small aspect of the process)

Risk Management procedures properly applied will assist you in preparing for problems as well as controlling the impact of these events.

It is a tool which may be used by Individuals as well as Businesses, and assists in the implementation of a plan which reduces your chance of having a loss as well as the amount of loss which may result.

A good Risk Management plan involves Five steps:

1. Identify the Items which are subject to a loss.
   
2. Identify the exposures which may cause a loss.
   
3. Identify the treatments available to handle these exposures.
   
4. Implement the best combination of exposure treatments.
   
5. Monitor and modify the plan regularly or as necessary.
   

1. Identify the Items which are subject to a loss. (Typically categorized as);

• Real property such as Buildings and Fixtures on land
  
• Personal property such as Contents & Property other than real property
  

• Income sources may be interrupted if Property is damaged
  

• Financial worth may be attacked through law suits for alleged third party bodily injury, property damage or personal injury such as libel or slander.

• You, your lifestyle and the cost to maintain a good life
  
• Your family and their lives and their contributions to the family
  
• Your employees and their benefits and their contribution to you
  
• Your friends and the public. Avoid law suits and loss of goodwill
  

Record the above Items clearly to Identify them and assist in Forming a loss picture.

Perils:

• Direct and obvious such as Fire, lightning, wind, vandalism, crime, etc.

Hazards:

• Maintenance, housekeeping, safety practices, flammables etc.

Listing the direct Perils then scrutinizing your premises and operational procedures for Hazards will show how the Items in #1 above may be subject to a loss. This will clarify your loss picture.

3. Identify the Treatments available to handle these exposures.
(Typically categorized as);

Retention:

• Deductibles, Self Insurance or bearing the risk yourself
  

• Separate items located near each other to spread the risk
  

• Implement a regular premises inspection with a check list that results in loss prevention through maintenance, good housekeeping, and safety measures etc. Prepare an action plan in advance of problems and include emergency phone numbers. Post appropriate warning signs. Provide adequate extinguishers and first aid kits.
  

• Dispose of unnecessary items that are subject to loss
  

• Where possible implement contractual arrangements that make others responsible for losses. Alter existing leases and contracts, lease instead of buying, obtain legally sound releases and get them signed by others, etc.
  

• Purchase appropriate insurance policies for losses that you cannot assume, avoid, or differ to others.
  

Recognizing all of the alternatives available to deal with loss exposure allows for the most practical application of the solutions. (Insurance is just one of the available solutions.) Some things will be obvious while many items will have several treatment options requiring considerable thought. Consider all of the treatment options for each item that is exposed to a loss before making your decisions.

4. Implement the Best combination of exposure treatments. At this point you will be in a position to prepare and implement your Risk Management plan. Review your personalized loss picture and select the most appropriate measures.

Careful implementation of this plan will accomplish three things;

• Reduce the likelihood of a loss and its related expenses.
  
• Provide the most cost efficient solutions to loss exposure.
  
• Peace of mind knowing that exposures are recognized and controlled.
  

5. Monitor and Modify the plan regularly or as necessary. (Life is not static)

People change, situations change, activities change and your resulting loss picture will change. An annual review should be part of your Risk Management plan and if obvious changes take place mid-year then a mid-year review may also be in order.

The Proverbial Ounce of Prevention:

• Examine your premise and the activities you will undertake carefully.
  
• View this situation from the eye of all those who will visit your premise, be involved in your activities, or be affected by your actions.
  
• Identify and record the physical hazards and the areas of activity which may cause a problem for yourself or to the person or property of others.
  
• Use this recorded information to create a schedule of improvements to make as well as operational controls or changes and a pre-event check list.
  
• Eliminate or reduce known hazards through good housekeeping, maintenance, and safety precautions.
  
• Post warning signs in obvious locations where you have identified a potential problem that cannot be controlled.
  
• Obtain legally sound releases and get them signed by others.
  

Through safety and planning the chance of a loss is reduced. This will keep insurance costs to a minimum. You should be working and thinking about avoiding loss situations to reduce your costs. Intercity Insurance will assist you in this endeavor which is to your benefit.

Intercity Insurance is able to offer a full range of products and services to assist you in the in the transfer of risk to an insurance company where that treatment of an exposure is warranted.

Back