Risk Management 101 for Businesses in Burlington
Running a business is no cakewalk, so it’s no surprise that implementing a proper risk management strategy is critical to any organization — no matter its size, industry experience, structure and so forth. Risks can present in several forms, from financial and physical, to operational and more. Risk management need not be extensive, but it should be tailored to uniquely match your organization. It can be rewarding getting to know your company from the inside-out, and moreover to protect it from potential hazards — many of which can be devastating.
CCV Insurance recommends business insurance for Burlington organizations as a critical component of their risk management processes. Insurance is not a sub for risk management, but a piece of a much larger puzzle. More on insurance as a form of risk transference later; when it comes to risk management, it’s important to look at every aspect of your business as well as every potential solution.
Risk Management’s 5 Main Parts
Risk management requires a little structure, a comprehensive understanding of your organization, and potentially a little time and money. Overall, it doesn’t take too much work to be effective, and can be altered over time.
Simply put, risk management can be broken down into the following five steps:
Identifying potential risks, in terms of your industry, location and specifics. What has the potential to go wrong (e.g., physically, financially, operationally)?
How severe and frequent are the potential risks that your business faces? Measure the severity and frequency to prioritize the order of addressing each risk.
Determine potential solutions for each risk that your business faces. You have options between avoidance, mitigation, transference and acceptance (more on this below).
Decide on which solution is best for each risk and implement that solution.
Monitor your results and adjust accordingly. There may be a lot of trial and error when it comes to determining the best possible resolution to each issue.
Avoidance simply means for an organization to avoid any circumstances where it might participate in an activity that results in an exposure. For example, this could mean not sending employees to the homes of clients to do work, discontinuing an operation or not offering a service in a foreign country.
Risk mitigation is essentially the reduction of the impact or potential of a risk. For example, this may include purchasing a security system, hiring security, installing floodplain protection, training employees with rigorous background checks and relocation.
Transference is the act of transferring risk over to a third-party. Business insurance for your Burlington organization is a good example, as it’s essentially the act of having your insurance company assume part of your risk. As you know, business insurance in Burlington may come in a variety of forms, including commercial property, workers’ compensation, general liability and moreover. Depending on your business, your insurance in Burlington may be comprised of a wide range of different options. Work with the expert business insurance brokers at CCV Insurance to decide what works best for your company.
Acceptance is the practice of acknowledging that some risks are inherent to doing business, particularly in your industry or physical space, and that performing whatever activity or service outweighs the possible risks. Examples may include natural disasters, credit risk, competition and project failures.
Types of Risks
When it comes to risk management, you’ll have to analyze all aspects of your business to determine potential risks and solutions. This means addressing different types of risks, including:
- Physical risks: This is the most common type of risk. Especially if you have a commercial property, physical risks may come in the form of explosions, fires, electrical shortages and natural disasters. Alongside your business insurance in Burlington, you should have a plan for your employees on how best to handle a disaster, including evacuation, procedure and a muster point.
- Location risks: Similar to physical risks, location risks include relevant nearby hazards because of the location of the business, such as crime and fire. To mitigate location risks, businesses should be familiar with evacuation protocol for the neighbourhood in which the organization is situated. Liability and property insurance are also helpful.
- Tech risks: Cybercrime is more prevalent than it has ever been. Beyond purchasing cyber liability coverage as a component of your Burlington business insurance policy, consider training your employees on how best to identify a potential security threat. Power outages may be another risk, so it’s integral to your operations to do regular maintenance or have a backup plan in the event of a surge until power may be restored.
- Human risks: Your employees may be the biggest risk to your operations, including issues like crime, embezzlement, fraud, human error, and even alcohol and drug abuse. Illness and injury are other potential problems. This is why it is imperative to do thorough background checks before hiring workforce, in addition to adequate training and human resources.
Business risks can be troublesome, and, in some cases, they can be destructive. There are ways to mitigate risks, avoid them, transfer them or even accept their potential. CCV Insurance is here to help with your business risk management plan. Our expert business insurance brokers in Burlington know businesses and can help you get started with your risk management strategy.