A Simple Risk Map of Your Business Can Be Extremely Valuable And Its Easy to Do !

So what is a Risk Map?  It is an easy way to look at the risk in your business and determine how to handle them. See the Risk Map below.  The vertical y axis is the severity and it measures low to high. The horizontal x axis is frequency and it measure low to high also.  Here are some basic guidelines to fill out the map:

In box 1- list the risks that happen very rarely but could have catastrophic costs to the business,.You would buy an insurance policy to transfer these risks. An example of this would be destruction by a fire, tornado or earthquake.

In box 2-  list the risks that happen more frequently but are extremely costly to the business. You use good risk management strategies and buy insurance to reduce and transfer these risks. An example of what goes in this box are accidents with truck fleets.

In box 3- list the risks that happen frequently but have low costs. In this box many will decide to pay out of pocket up to certain limits for these. For example, a manufacturer who has a lot of very small work comp injuries may elect to pay out of pocket for the first $10,000 then transfer to an insurance policy.

In box 4- List the risks that happen very seldom and also cost very little dollars to the business. Many business owners fully self insure these risks. An example of this would be a restaurant that accepts the  occasional waste of food that can occur during food preparation.

The risk map can be an easy and valuable tool. Categorizing your business risks and following the guidelines for treating those risk based on the "boxes", will help your business.  Consult your insurance and risk professional to help get you started. 

Until next time be careful out there and know your risks.

Posted By G. Kevin Nemith , President CNC Insurance/Pfister Insurance, Hilb Group Mid-Atlantic