Risk is an unavoidable part of doing business as the owner of every company knows. Despite the various exposures that most business owners face, this is something that is both manageable and controllable. This is a challenge that requires some time and perhaps some trial and error as well, but finding a fine balance between profitability and loss control is essential to success.
While it is improbable to eliminate risk completely, the idea is really to try to lower the odds associated with everyday issues. Policies involving risk management for MA companies that are enacted in an attempt to fully eliminate risk may actually do more harm than good, so first it is important to set some realistic goals.
The importance of a sound risk management strategy
The common concept of risk management among many small business owners involves the simple process of purchasing some form of insurance protection. While vital, it is important to consider other aspects of protection as well. Risk management is much more complex than simply purchasing insurance; it requires implementing rules and evaluating how well a plan or strategy is actually working. These are both necessary parts of every plan. However, there are still other things to consider as well:
- Implement a regular comprehensive loss analysis. Every owner can learn from past experiences and put resources where they’re most needed and can be most effective.
- Identify the true costs of losses and then translate these costs into sales dollars. This can be very useful information for deciding on future allocations of resources, which can help in reducing or eliminating losses.
- Do some research and check web sites, trade literature, loss control professionals, and other resources that may offer some assistance. Insurance carriers, agents, and trade groups can also offer potential sources of information and provide assistance.
- Perform a material handling assessment. Moving materials is typically a “non-value-added” activity. This often leads to high-severity losses.
- Do an ergonomic assessment. Improving ergonomics can lessen worker fatigue and this can lead to an increase in productivity and efficiency.
Implement a MA risk management strategy for managing changing conditions. With new technology comes a change that may reduce risk management expenditures that may prevent losses as well. Finally, discuss safety issues at management meetings, and review product safety since this is a problem that can have a significant impact on the business. Focus training on reducing specific losses and monitor any and all success.