A Good Risk Management Programme is like Money in the Bank!

Article by Ron Glasser

Risk management can be complex for a large corporation, but it’s not necessarily so for small and medium sized business. Risk Management involves the evaluation, management and economic control of risks that threaten the assets or earnings of your business.

In order to evaluate the risks faced by your business, your first task is to identify them and measure them. Classify them as property, earnings and liability threats. Then look around at all your property and make a list of those assets and earnings which are at risk.

Buildings, equipment, inventory and vehicles are obvious property risks. Appraisals and valuations will give you the measure of the financial threat they represent. Examine your company’s operations and products to discover possible liability exposures to the public, other third parties or employees. To deal with the risks, you should have an effective loss prevention programme.

Fire and natural disasters are likely to have the most severe impact. Regular inspections, preventive maintenance, upgrading and good housekeeping are keys to safeguarding your facilities. Fire-protection measures such as sprinkler systems give you tangible benefits in this respect. Keep up-to-date on all local and area by-laws and regulations which govern the repair and rebuilding of damaged buildings. Be aware too of the zoning of your premises and any changes that are legislated.

When you review your liability risks, take into account possible bodily injury, property damage, advertising injury and personal injury. That latter term applies to harm caused by libel or slander (except in advertising), false arrest, detention, imprisonment or malicious prosecution, wrongful entry or eviction or other invasion of the right of privacy. Make sure that in and around your premises is as safe as you can make it. In this case, check for un-even walkways, pot holes, walking obstructions and anything that could cause a trip and fall. Also, proper documentation of snow plowing, sanding and salting is imperative. When an occurrence happens and is reported to management, proper documentation is also imperative.

See that your properties are safe and healthy for all your employees. This includes their protection against sexual harassment and discrimination as well as their physical safety. You should be familiar with all legislation and regulations which govern employees in the workplace. Oversights could prove costly. Damaging lawsuits against you might impair your company’s finances. They will certainly hurt its image.

Automobiles present their own liability problems, influenced by the jurisdictions in which you operate them. Do not overlook leased, rented, hired and employee-owned vehicles as well as owned automobiles. Look out for the use of such vehicles by family members not in your employ.

When your Risk Management programme is in place, you are then able to assess which risks you and your business can bear comfortably. You can transfer to others some of those that remain. Use legal agreements as much as possible to pass risks to sub-contractors and suppliers. For example, you can require them to sign “Hold Harmless” or “Waiver” agreements to assume some of your liabilities. Beyond these, your insurance should provide coverage for most eventualities.

For More Information:

R. A. (Ron) Glasser
Senior Associate Broker
Dan Lawrie Insurance Brokers Ltd.

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