Issue link: https://read.dmtmag.com/i/202668
INSURANCE ISSUES What Can a Risk Management Culture Save You? Have you ever met a business owner who didn't want to save money? Yet the direction in which some owners take their cost saving efforts can have the opposite effect. With today's economy leaving little room for error, trimming unnecessary expenses is the logical first step toward belt tightening. Unfortunately, risk management is sometimes looked upon as an unnecessary expense. Garrett Pepper Account Executive, ARMS This publication is intended to provide general recommendations regarding risk prevention. It is not intended to include all steps or processes necessary to adequately protect you, your business, or your customers. You should always consult your personal attorney and insurance advisor for advice unique to you and your business. © 2013 Federated Mutual Insurance Company. All rights reserved. 26 Oil Prophets First, by eliminating risk, your company could experience fewer insurance claims. That can equate to lower premium for property and casualty, workers compensation, and health insurance. • Second, fewer claims means you also reduce the "after effects." Insurance is meant to cover the direct costs associated with a claim, such as property damage, medical bills, and legal expenses. What some businesses don't realize or plan for are the unexpected, "hidden" costs a loss can generate. For example, insurance may not cover the cost of hiring and training a replacement employee, lost productivity, negative publicity, higher premiums related to the loss… and the list goes on. Associated expenses are typically out of pocket and can quickly add up. It could take a lot of time and many extra sales to recoup those losses. • Last, workers compensation claims often result in a higher work comp mod. Not only can this have an immediate effect on your premiums—which directly impacts your bottom line—the consequences may be felt for a long time. Companies passive toward reducing their risk may not fully understand the benefits a risk management culture can have, and instead may be discouraged by the time and money needed to concentrate on safety. Successful companies, on the other hand, understand that to avoid possible financial ruin, they need to work to reduce their exposure. They realize risk management, despite the time and financial investment it requires, can have overall economic benefits while creating a safer working environment. No company, no business owner is immune to potential loss. But knowing ahead of time where the risks lie, and then acting to avoid them through aggressive risk management, can keep a company ahead of the game. The blueprint for controlling losses is a commitment to risk management through involvement. But that requires investing dedication, resources, and sweat equity to make it happen. It's Our Business to Protect Yours® • Why bother? It may feel counterintuitive to believe that a risk management culture—the sum total of all the efforts, attitudes, and investments related to workplace safety and loss prevention—can actually improve your bottom line. But an investment in risk management can have definite advantages: Companies that take risk management seriously understand its positive effect on their operations, both from an employee safety and a financial standpoint. They see immediate value in being proactive in protecting their assets. As one risk manager put it, "There are many business owners who believe that safety is too expensive. I would challenge them to put a pencil to it. I think they will be surprised that safety pays."