Risk is an everyday part of life, in our personal lives and in the business world. Few scenarios involve no risk, especially in a commercial context. That is why insurance exists, of course, to offer protection from events and situations that could adversely impact an organization. That being said, even though risk cannot be fully avoided as a business, you can learn how to address risk and how to mitigate risk through risk management practices.
Insurance itself is not necessarily risk management. While having insurance in place is a key part of being able to respond to and bounce back from a risky situation, insurance does not cover every situation. Companies need to take action in advance to address potential issues, knowing that insurance is not always going to save the day.
At Prime Insurance Company, our team of risk management experts works diligently and carefully to advise insurance producers and insureds, analyzing a company’s risk profile through evaluating and assessing the business site, operations, and policies. We make specific recommendations to each policyholder to manage risk in a way that does not adversely impact the business while reducing the potential for catastrophe. While each business is different, and our risk management advice reflects that there are some basic steps that practically any entity can take to reduce risk.
While risk is typically looked at as a negative thing especially in the context of insurance, it’s important for organizations to understand that risk is just part of doing business. While it’s associated with negative or unwanted outcomes, one of the first steps to risk management is understanding that risk can have positive results too. There are threats and there are opportunities.
That means that the goal of risk management is not to get rid of risk entirely, but to create a safety net of sorts for negative risks while expanding the opportunities for positive outcomes.
Cutting out actions and activities that are far more likely to have negative results is important, whereas some risk with the potential for positive impacts may be acceptable to a business so long as the insurance coverage is in place. Our risk management experts are adept at determining what risk is acceptable and how to mitigate unwanted outcomes.
Risk evaluation means looking at how a client’s company operates and what risks they may encounter along the way. Risk management starts with a full evaluation and audit of current practices and policies, to understand the probability of a positive or negative impact and what is acceptable. You may hear this referred to as ‘risk appetite’ or, in other words, how much risk a company is willing to accept.
Risk evaluation must look at not just the company at the present moment in time but how risk might develop or change over time. Some activities and events lend themselves well to quantitative risk assessment, using models to determine how risks could impact outcomes, while others are more qualitative, describing risks and their characteristics so they are fully understood.
When organizational leadership makes decisions, the potential risk for each scenario should be outlined and explored as part of risk evaluation. Regular reviewing and updating of risk appetite and potential is key, even once an organization is insured.
Having the outside perspective of an insurance team and its risk managers, like the experts at Prime Insurance Company, can be very helpful in identifying gaps and lapses that are harder to see from the inside. Many times, companies do risky things because that’s the way things have always been done, and they cannot see the potential for a negative impact. With decades of hands-on experience, training, and education, insurance professionals are adept at discovering and mitigating these risks without being clouded by personal biases or feeling stuck with the status quo.
It can be challenging for a business to change from the status quo, and people at all levels of an organization may feel reluctant to make changes. When the difference is being insured or not being able to secure coverage, however, the stakes are high. Part of risk management is understanding that agencies and organizations of all type need to be willing to innovate and adapt, especially under the advice of risk management experts.
Stakeholders and other leaders are key to any business adopting a culture of risk management. Buy in from the top down impacts the overall corporate values, beliefs, and attitudes, setting the right tone for how to address risk and how to be aware of its impacts.
Any major risks identified by risk management professionals or company stakeholders should be communicated from the top down, with open lines of communication to allow employees of all levels to alert management to the potential for high-impact risks. Having clear policies in place, documented, and adhered to starts from the top and needs buy-in from all levels.
In the context of securing insurance coverage, employees and stakeholders at all levels should understand why insurance is key and how making changes to risk management can help keep a company competitive.
Managing and Insuring for Risk with Prime Insurance Company
At Prime Insurance Company, we are dedicated to being an insurance carrier that cares. Our commitment to a strong partnership with producers and policyholders extends to our risk management operations. We also know that risk, in insurance terms, can be costly, and reducing risk may mean more affordable insurance rates for policyholders. Insurance agents who can offer affordable policies, even to higher risk clients, will be in great demand, so if you are looking to add to your business, this is one good way to do it.
For more information about how we handle risk, and why our process means we can insure those who have been turned down by other carriers, please get in touch. We’re happy to provide details or answer any questions; simply contact our team at 801-304-5500 or send an email to firstname.lastname@example.org.