What’s the Risk?
A comprehensive risk assessment can help pinpoint exposures and provide business owners with the information needed to protect their companies from significant loss. Whether your business has just opened its doors or you have been operating for the last 30 years, it is important to perform current risk assessments to determine the biggest threats facing the company. As the business world evolves and more technological advancements are achieved, the list of potential exposures continues to grow and becomes more complicated. A risk assessment can be a beneficial exercise to help business owners modify their insurance coverages and safety practices to appropriately adjust to a constantly changing risk atmosphere.
Simply defined, a risk assessment is a process of evaluating operational and physical risk factors that can lead to injury or physical loss. Common areas of evaluation include:
- Safety policy statements
- Substance abuse
- Accident investigation
- Claims management
- Emergency response
- Regulatory compliance
- Contractual liability
- Motor vehicles
- Other industry-specific areas
Evaluating and rating a company’s proficiency in each area can provide a roadmap for continuous safety improvement. The process is designed to measure current practices against best-case practices in the industry. The ultimate goal is to identify areas of opportunity and provide businesses with a multi-year risk management plan for implementation. The evaluation should maintain focus on safety and effective communication to capture new and evolving risks in lieu of relying on practices that have been in place for many years without evaluation for applicability.
Risk assessments can also be a key step in understanding and preparing to lower insurance costs by gaining confidence to increase deductibles or captive insurance programs. In addition, it can provide excellent documentation for negotiating with your insurance carrier in the standard market. Insurance underwriters have responsibilities similar to commercial loan officers. They are responsible for analyzing risk as they prepare to commit their organization’s assets. Loan officers document their files with detailed financial information to substantiate loans and to defend their decisions should a loan go bad. The same is true of insurance underwriters. When a large loss occurs, underwriters may be asked to justify their pricing of the insurance. Comprehensive risk assessments can provide underwriters the needed documentation for their files that will give them confidence to provide more aggressive insurance pricing and a “defense” if they are called to account for their pricing decisions when a major loss occurs.
It is important for business owners to ensure that their investments in safety and risk management are getting the underwriting credit they deserve.
Don’t Wait – Act Now!
If you have not recently conducted a risk assessment for your company, we urge you to consider doing so – it could be the difference between success and failure. Completing comprehensive, annual assessments with a reputable risk manager can provide peace of mind knowing that you have identified the various exposures that could threaten the longevity of your company, and that confidence is priceless. For more information about risk assessments and how to protect your business, contact the risk management professionals at SilverStone Group.
This article originally appeared in the Winter 2015 issue of the SilverLink magazine under the title “Make It Your Business – Identifying Organizational Risk.” To receive a complimentary subscription to the SilverLink magazine, sign up here.