When I ask business owners about how they handle risk, I normally get the answer that they have insurance policies. True risk management involves five steps. If you take an area of your business and apply these five steps, you may find that insurance is not the best way to treat that exposure. It will ultimately save you money as you address the total cost of risk instead of focusing on the premiums you pay to your insurance carrier. Here are the five steps:
Risk that is not identified is not treated. Involve everyone in your organization, allow free communication and even put a comment box in your work area. Your employees are your best advocates in safety.
We need to measure the risk, determine our tolerance and impact on the financials and then determine whether the risk management techniques will bring benefits that exceed the costs.
Before an incident through loss control.
Controlling the severity. Claims management to reduce unnecessary costs.
Risk transfer using insurance or contracts
Implementing and monitoring your whole risk management program.