Risk management isn't a pleasant topic. It's not comfortable to talk about the things that can go wrong, and it's even more uncomfortable to discuss the unforeseen risks every company faces.
However, every business has to determine an acceptable level of risk. You realize that even with tight operational control, excellent management, and motivated employees, your company is still exposed to risks in every aspect of your operation.
Your employees, naturally, expect you to be prepared to deal with risk. There are other people outside of your company who are also dependent on you managing your risk, your customers. According to a study conducted by the American Institute of CPAs, 65% of the companies surveyed admitted to experiencing an "operational surprise" in the past five years. Only 25% of the companies said they have a plan to manage their risk.
Risk Management Extends Beyond The Walls Of Your Buildings
If an incident arises at your company it will affect your customers. If there is an interruption to your service, it will disrupt their business. Do you have a comprehensive plan to continue supplying your customers in the event of a significant disruption?
If not, what is preventing you from creating a plan? According to the same study, 42% of the respondents said they don't prioritize their risk. The company directs resources to other initiatives, or they lack the resources to deal with risk. 60% said that have they have provided minimal training to their staff about dealing with risk.
Large companies with extensive resources can absorb that kind of risk. However, smaller companies are vulnerable to immediate repercussions if they don't have a plan.
Create A Team To Address Risk Management Issues
The best approach is to create an executive team or committee. This team should include people who are managers, logistics experts, and most definitely your IT department. You should also include an insurance expert because any incident will most likely involve insurance claims and payment. In fact, those payments could become critical to the continued success of your business.
At Culture Insurance, we have extensive experience in helping companies create risk management plans and implement those plans. Risk management plans should be updated yearly to ensure they are in line with the current productivity of your company.
If you believe you are in need of a formal plan to deal with risk, or if you have questions about the insurance coverage you have on your business, we invite you to contact us. We are experts in helping companies protect themselves from the unexpected.