Proper risk management helps you run your business smoothly
Unexpected situations are a part of life. No matter how hard we try, we can not ignore them. Pretending they will never happen will only make it worse.
As an entrepreneur, active managing risks is crucial to the health of your business. You must be prepared to face a variety of unexpected circumstances. Being caught and having no reaction plan could lead to your surgery.
Identifying your risks
Putting your finger on the risks that can affect your business is the first step in managing them. It's about understanding the things that pose a threat to your business success. To understand what your most important risks are, you need to conduct a comprehensive business analysis that could potentially pose challenges for your independent insurance agency or other companies.
Identifying your business risks is not a way to sweep them under the rug. Your risk management plan is not intended to make these risks disappear but to help you manage them by accepting, transferring or reducing them, in most cases.
Some common risks are:
- Building hazards, such as fire or explosion
- Hazardous material hazards, such as spills or accidents related to acid, toxic liquids or gas
- Human hazards, such as illness or injury
- Location hazards , such as floods, hurricanes and other natural disasters
- Technical risks, such as power outages or communication failures
Assess their probability
Once you have identified your risks, you must prioritize them according to their probability of happening. You can define your scale – much or something likely to happen, neither likely nor unlikely, much or something unlikely to happen. You may also want to evaluate your risks to determine their effect level.
Create a risk management plan
At this point you are ready to put together an action plan that describes what needs to be done if a risk becomes a reality. Insurance is one of the most important things that can help you protect your business from various threats.
Prevention is the best way to minimize the risk. Things like performing maintenance on your equipment, creating succession plans for when you lose a key personnel, doing maintenance on your premises and providing proper training, can make a difference.
How do you manage risks for your agency? AAI is here to give you tips and resources to help you through all sorts of situations so you can get to the top every time.