So as you take that first step you will need to answer some questions about 4 areas of your business. These are called Logical Classifications, and they set the stage for risk discovery. I have listed these below with some examples of finding risk in your business.
1) Property- are your buildings old and outdated?, are fire hydrants close by?, are there flammables in the building?, are you insured to the right limit?... These are just a few areas to look at when it comes to your property.
2) Human Resources- Employees are your biggest asset and also the biggest challenge. Assessing exposures to work place injuries, moral and morale hazards, and relationships in the workplace are good things to start looking into.
3) Liability- Does your business operations bring increase liability potential. Does your business have greater liability risks on premises, off premises, or overseas? Do your employees create more or less liability for your business? These are some of the questions you may want to ask yourself.
4) Net Income- What happens when revenues decrease, expenses increase, and competitors creep in? How will your business do if there are market fluctuations, poor investment returns, and lack of capital? This is the classification that keeps most business owners up at night.
Using the 4 Logical Classifications as your guide will open the doors to risk identification. It will allow you to dig deep into your business and put together a risk mitigation plan that will surely get your business to the next level of success.
Until next time be careful out there and know your risks.
Posted by: G. Kevin Nemith. President/Agency Leader. CNC/Pfister Insurance. A member of the Hilb Group.
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