Navigating Your Risks

We all manage risks on a daily basis. From quick intuitive decisions to intentional long-term planning, we all work to filter the negative outcomes from opportunities.

We use the term “Risk-Management” frequently. This truly is more than just industry jargon, it’s the foundation for quality insurance that centers around a healthy future. When we refer to risk management, we are talking about a cyclical process to help pinpoint and treat potential losses that may arise in your lifestyle or business. We all face potential “threats,” both predictable ones and unpredictable ones. Risk management is simply our tool to methodically mitigate and cope with those risks.

Historians speculate that the concept of risk management evolved from gaming, way before the internet was even a glimmer of thought. Games like rolling dice, chess, or checkers sparked a letter correspondence between mathematicians, Pascal and Fermat, identifying the modern-day theory of probability. Today, we have we have scholars dedicated to studying

this theory, experts within corporate America who solely help companies dodge risks, and an entire insurance industry focused on risk management.

Let’s venture into the practical application of risk management and explore 4 core steps within this cycle. Each one of these steps is something you can put into practice to determine, sort, and organize risks in your personal lifestyle and professional endeavors.

Identify: Ask the right questions, uncover risks, and define your risk profile

Name as many risks (big or small) you can think of. For your personal risks, think about your environment, your commute, home features (like a pool or a well), animals, nearby roads or city structures (like a power plant or even sewage lines). For Businesses, always think though a filter of your specific industry. Consider your products/services, employee retention rate, importing/exporting, how much cash you have on location, digital equipment, how many customers you have, and more. The good news is, your insurance agent should help walk you through this brainstorming session. Yes, some of these risks will be straightforward. However, the more transparent you are with your agent, the more they should be able to help you fill and uncover potential liability gaps.

Organize & Prioritize: Measure the impact and probability of each risk

We’re back to probability. This stage assigns structure and meaning to all of those risks you poured on the page. A very practical way to do this is measure the risk impact against the probability of it happening. There’s no doubt some of the answers are common sense, but for the risks that make you pause and think, this a great method to pinpoint a risk’s severity based on where it falls in likelihood and impact.

Implement: Assign strategies to reduce the severity of financial losses

Now that you have your risk profile determined and organized in order of importance, it’s time you choose a technique to handle each exposure. Your insurance agent will evaluate the full picture and provide you with an extensive list of coverages and endorsements that address your needs (keyword need). Unless you plan to completely retain the risk and full finical responsibility, you will most likely need an insurance policy. However, there are various ways you can reduce each risk. Many times, a thorough insurance policy coexists very nicely with these techniques to lessen your chance of an incident even occurring. Here are just a few for your reference:

• Contractual Risk Transfer – This uses written contracts, like indemnity & exculpatory agreements, waivers of recovery rights, and 3^rd party insurance requirements, that ultimately modify your financial obligations. We highly recommend working with your lawyer to establish these.
• Risk Control – This uses training, safety, and security protocols to help prevent loss from even occurring in the first place. If you are a business owner, we always recommend you implement continuous growth and training opportunities for your employees.

Monitor: Follow up and adjust as needed. As you evolve, so do yours risks

We use your annual renewal date as an opportunity to actively monitor your risks. About 30-60 days prior to this date, you should receive a Notice of Renewal from your carrier. At this point we conduct a holistic review to see if you have any new or changed risk exposures such as…

• Do you have any new drivers in your household?
• Do you own new pets?
• Do you have any new employees?
• Have you made any new renovations to your home?
• Are there any changes to your personal information?

This is not to say that you should wait for your annual renewal date to contact us if something does change. If there is a change in marital status, a name, or home occupancy, etc. you’re required to tell your agent so they can add or remove language from your policy. If this information is not correct or updated, carriers can void contracts. We are always an email or phone call away.

Our goal is to ultimately help you make better risk management decisions and protect the legacy you’re building. The cyclical process of risk management allows us to stay in relationship with your ever evolving needs.

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