What is Risk Management?
There are probably more definitions than there are types of risk management. Risk Management comes into play with everything we do, from living our personal lives to operating corporate and public entities.
Simply put, risk management is the process of selecting effective strategy for preventing and mitigating unexpected losses that could financially destroy a business. These losses include everything from employee injury, damage to property, and claims arising from one's liability to business interruption, loss of income, and general uncertainty.
Prior to the early 1960's, the term "risk management" was very uncommon. Businesses purchased insurance to protect themselves financially from claims, thus transferring their risk of loss to the insurer. Insurance was purchased; losses occurred; claims were paid; and insurance was usually renewed at very low costs, compared with today's pricing.
Today, it is not that simple. There are fewer insurance companies in the State of Florida willing to write coverage today. Moreover, premiums are much higher and the remaining competitive carriers only wish to write those risks that are proactive and successful in preventing claims.
Thus, the purchasing of insurance (risk transfer) is only one part of today's "risk management process". It is essential for today's individuals, corporations, and public entities to:
- Identify and analyze loss exposures;
- Examine alternative risk management techniques;
- Select the apparently best risk management technique(s);
- Implement the chosen technique(s);
- Monitor the results of those technique(s).
Do you need risk management?
Absolutely! Some individuals and entities have more exposure than others, but overall, anyone taking a risk should do all they can to prevent a bad result.
Many individuals and entities have low enough exposure to risk, that they can successfully manage that risk on their own or perhaps with the help of an insurance broker. However, the greater the exposure, the more difficult and expensive risk management becomes.
Why hire us as your Consultant?
The five steps of the risk management process are much broader than strictly using the single risk transfer technique of buying insurance. Insurance is usually the most expensive method of risk management and when left unchecked, can increase in cost year after year.
Ben Few & Company shows its clients how an effective risk management program will contribute to a better bottom line, and better piece of mind.