Identifying and Managing Business Risks 

In a dynamic and fast-paced business world, your organization must be prepared for unexpected situations. While you cannot always predict when accidents, errors and other incidents may occur, you can at least have laid the groundwork for identifying and managing business risks through planning and preparation. Identifying and managing business risks well before an incident occurs can be an invaluable investment of time and resources.

How to Identify Business Risks

The first step in minimizing the risk of accidents and other mishaps is understanding where and when they may occur. By conducting thorough analyses of all business functions and discussing management methods with various team leaders and personnel throughout your company, you may be better positioned to avoid incidents or minimize resulting losses. It may be helpful to categorize risks into the following classifications:

• Physical risks, such as on-site incidents involving fires, explosions and hazardous materials

• Location risks, such as incidents occurring near or around your business, such as hurricanes, floods and earthquakes

• Human risks, such as dishonest employee conduct, substance abuse and workplace injuries and illnesses

• Technology risks, such as data breaches and power outages

• Strategic risks, such as misallocation of resources or poor planning

How to Manage Business Risks

Once you’ve identified risks relevant to your business, it’s time to address them. Consider the following steps:

• Quantify risks. Establish measurable metrics regarding the risks you’ve identified. For example, you may want to grade them according to the likelihood of incidents and the potential severity of financial consequences.

• Implement solutions. There are many ways to limit the likelihood of accidents, errors and other incidents. For example, if fires are a significant risk, using nonflammable materials and installing reliable sprinkler systems may be helpful. Similarly, businesses that work with sensitive data should ensure they have robust cybersecurity practices, such as using virtual private networks and requiring two-factor authentication.

• Acquire insurance. Regardless of how diligent you may be in assessing and addressing your business risks, you may inevitably need to manage the aftermath of an incident. Ensure you’ve acquired the right insurance portfolio capable of offsetting losses related to your physical property, liabilities, business interruptions and other unexpected expenses. Your business should also understand and adhere to any legal requirements regarding insurance, such as for workers’ compensation and commercial auto coverage.

• Schedule reassessments. Be certain your business sets a concrete future date when decision-makers will revisit this entire process, including reidentifying risks and adjusting management measures as necessary.

We’re Here to Help

Contact Lyceum Insurance Services today to learn more about risk identification and management in your workplace.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.