Risk & Business Magazine Nesbit Agencies Fall 2016 | Page 29

AVOID LOSS BY: CHAD NESBIT, NESBIT AGENCIES Avoiding Loss Through Risk Management Creating A Risk Management Plan A voiding loss means having a full risk management program in place for your company. Protecting your business by having full insurance coverage for your various areas of operation is one aspect of that program, but a complete strategy of both managing risks and identifying new risks is essential to continuing business operations. Loss reduction encompasses many areas, but ultimately it is a proactive plan that is put in place to minimize the impact of identifiable business risks. The first step is to determine what risks your company might be facing. To do this, it is often easiest to combine your own industry expertise with that of an insurance agent or broker. Coming up with a plan begins with identifying what level of loss is acceptable to you. This can be in terms of money, but it can also be in terms of time. For a web-hosting business, server downtime can be a much more important indicator of company health than its current finances. For others, like retail operations, the bottom line may be all that matters. Acceptable loss limits can be zero in the event of natural disasters or fraud while in other instances, it can be stated as a length of time. Once your company’s loss limits have been determined, you can begin the process of ranking the risks you have identified in order to understand how best to respond to each of them. The next step is to manage your loss reduction strategies. This includes a complete review and update of your company’s business insurance. Make sure your company is covered for any possible exposures that it may face. You also need to create or modify your company’s internal policies when it comes to control of information and safety. Furthermore, you should implement a set of standards for your company’s operating procedures. Finally, you need to reduce potential losses that could stem from negligence by using a contractual liability clause in your company’s commercial liability policy. Rules should be in place stating that any contract your business enters into needs to include a negotiated limited liability clause. Employing a safety officer is also a good idea, though it is not always necessary. Anything you can to do help mitigate physical risks and comply with both state and federal regulations are good steps to take. At a minimum, businesses would be well served to consult with OSHA and local fire and public health departments. All three organizations have free resources for businesses and individuals to help manage risk. One aspect of assessing risk is determining whether or not any given risk can be ignored or whether it needs to be addressed. Both the size of your business and its cash balance will factor into that analysis. A business is only as strong as its protection from potential risks. How strong is your company? Do you have risk management plans in place? If you would like a review of your current risk management program, please contact Chad at [phone] or [email protected]. + Chad has over 23 years of experience in the areas of risk management and insurance program development. Chad currently oversees the marketing at Nesbit Agencies. Chad helps develop risk management plans for many different industries and companies of all sizes. In addition to his agency responsibilities, Chad also serves on various insurance company advisory boards regionally as well as nationally. FALL 2016 | 29