Do you know your own risk?
My older brothers loved to figure out new adventures, experiences or just participate in daredevil activities. In all these opportunities, I was their test subject, or better, their test dummy.
In one such experience, they decided to build a zipline from our house to our barn. This was about a 100-yard run that started at a height of 15 feet and dropped to 5 feet at the end. They were so excited to try this out. On me.
I came outside to their excitement to try out this new ride they had created. I was suited up with the proper safety equipment, which was nothing but blue jeans, a t-shirt and regular shoes. I was lifted up and told to hold tight to the three-foot long plastic covered piece of wire. Yes, this half inch wide, three-foot long piece of wire was my ride down this zip line.
In place, my brothers gave me a push and down the rope zip line I went. The wind blowing through my face as I picked up speed as I fell to the ground. The pain immediately came as I landed flat on my behind. It was not much fun. My brothers started to fight over whose responsibility it was to catch me.
Regardless, I recovered, and the zipline was given up on.
In 15 years of insurance experience as an underwriter, I have done nothing but understand and study and evaluate risk in a variety of industries. And it was understanding the risk associated with every business that led to the insurance policy that was created.
The common definition of risk in insurance is, “uncertainty arising from the possible occurrence of given events.” My brothers had created this exciting and fun activity of having a zipline in our backyard. What they didn’t take into consideration was the risk that came along with that activity. From safety equipment to the participant, there is a risk in everything. And the same is with your business.
The question we all have to ask ourselves is, “what is the risk that comes with our business?” Understanding your risk means that you can properly take action to minimize that risk. And those risks can come in a lot of forms. In another blog we will get into some industry specific risks that affect your business.
In general, it’s important that you consider the following when evaluating the risk of your business:
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Does my product or service have an inherent risk associated with it?
My brother’s zipline had inherent risk – such as fall potential to the participant. We all like to think we do things right. And we all like to think we provide a safe product or service. But when we realize that there are things we do that can have risk to others, then we can create a plan to minimize those risks from affecting our business production.
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Have I created a plan to deal with risk?
You see these plans in place all over the place. Warning labels on packaging, fencing around construction sites, hazard lights on tow trucks – these help indicate various risks to prevent injury to a customer or employee or a non related third party. Having a plan in place helps guarantee your activities that will help prevent risk and most importantly, help prevent a claim from occurring.
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Is my plan working?
Again, we like to believe we are doing things right, but are we doing things right? Constantly reviewing this helps you keep operating at maximum capacity. What we sometimes forget is claims will slow down business. And claims cost money. Making sure your plan works and is working properly cuts down on costs.
That zipline had all the potential to be fun. The preplan needed some work to ensure a successful execution, but I guess leaving the expertise to a 14- and 16-year-old, should have been a good hint to the 9-year-old that the risk was too great. The follow up was scrapping the idea altogether.
Your business will succeed if you include a proper risk management program! One that identifies the risk your business faces itself, as well as to the customers and public you interact with. If you build an executable plan that is tested time and again, you will minimize those risks you face.
At The Redford Agency, we spend time with you in evaluating and developing your risk management plan. We do more than just get you insurance. We work with you to make sure your insurance is best in the market, as well as responding to your business risk needs. Take advantage of our knowledge and our skills and you will see what we can do to help you minimize your risk, as well as improve your insurance needs.
