Risk management is the process of identifying, analyzing and implementing one or more strategies to avoid, control, transfer or accept a given risk. And while these processes and strategies can be fairly complex, at a fundamental level they’re all about common sense. Take, for example, driving a car. Without realizing it, you are practicing various types of risk management each time you hit the road. Here’s a look at a few:
Risk Avoidance: When considering the introduction of a new feature, service or activity into your business, examine the cost and benefit of the risk to determine if you should or should not move forward with it. This is something you do regularly while driving. Imagine you’re late for work and have a meeting, but you know the risks of speeding include: Getting in an accident, and being pulled over, receiving a ticket, a fine and a higher insurance premium. The potential benefit? You get where you’re going faster, and make it to your meeting on time. Each day you have to decide if the benefit is worth the risk, or if you should avoid said risk all together. At Everest Insurance®, our loss control experts advise and offer services to help you choose the right risks for your business. We also offer policyholders access to loss control programs including Orion Fleet Intelligence and Safety First Services, which provide significant savings to policyholders by reducing costs, improving safety and increasing productivity.
Risk Acceptance: We often see signs along the highway reminding us of the speed limit. If you ignore the signs and decide to speed anyway, you are accepting the risk of getting in an accident. An example of risk acceptance is the insurance deductible on your automobile policies. The amount of the deductible is the amount of financial risk you are accepting in the event of an accident, and the benefit of accepting more risk would be enjoying lower insurance costs. Since risk acceptance often relates to the amount of money you are willing to spend or lose, as well as the potential impact on your business, this strategy needs to be carefully considered. Every company’s optimal strategy is different to achieve this goal, and Everest can create a flexible program that matches up with the unique needs of your business.
Risk Control: Do you stop at red lights? Turn on your windshield wipers in the rain? Slow down at curves? If you answered yes to these questions, then you are already practicing risk control. This strategy involves initiating actions to prevent a loss or minimize its outcome. In business, risk control practices may include a variety of safety and loss control practices, including employee selection and training, written procedures and inspections, warning signs, and engineering solutions such as non-slip surfaces, hand rails and railings, security fencing and locks and installing fire and burglary alarm systems. Everest’s insurance experts can work to identify potential hazards so that they can be eliminated before they become a problem or liability. In addition, Everest offers its policyholders access to mobile app ZERO®. ZERO’s goal is to help eliminate workplace accidents by allowing you to identify, track and respond to incidents and safety hazards in real time. Controlling risk often pays big dividends, not only in preventing or lowering claims, but in enhancing business efficiencies.
Risk Transfer: Risk transfer involves having others perform a specific service or activity for your business – for example hiring a vendor to provide food service at an upcoming event or a contractor to re-model your facility, or having an insurance company take on some of your financial risk. This strategy often allows you to provide a wider range of services to your customers without incurring the added risk. Transferring risk may require a contract containing indemnification and hold harmless language and evidence of insurance from the vendor or contractor to ensure that they have the financial resources to pay in the event of a claim. Successfully transferring risk may require that you consult your attorney to craft a contract and your insurance agent to recommend the required coverages and limits. This is where Everest’s exceptional underwriting professionals are valuable. With innovative underwriting, Everest can tailor a policy that allows you to grow your business with financial peace of mind.
Every business has many types of risks to manage. And while avoiding risk may not always be possible or prudent, using a common sense approach when applying these risk management practices will help support your goal of having a successful and safe business.
Everest Insurance® markets property, casualty, specialty and other lines of admitted and non-admitted direct insurance on behalf of Everest Re Group, Ltd., and its affiliated companies. Everest Re Group, Ltd. is a Bermuda holding company that operates through the following subsidiaries: Everest Reinsurance Company provides reinsurance to property and casualty insurers in both the U.S. and international markets. Everest Reinsurance (Bermuda), Ltd., including through its branch in the United Kingdom, provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers. Everest Reinsurance Company (Ireland), Limited provides reinsurance to non-life insurers in Europe. Everest National Insurance Company and Everest Security Insurance Company provide property and casualty insurance to policyholders in the U.S. Everest Indemnity Insurance Company offers excess and surplus lines insurance in the U.S. Everest Insurance Company of Canada provides property and casualty insurance to policyholders in Canada. The Company also operates within the Lloyd's insurance market through Syndicate 2786. In addition, through Mt. Logan Re, Ltd., the Company manages segregated accounts, capitalized by the Company and third party investors, that provide reinsurance for property catastrophe risks. Additional information on Everest Re Group companies can be found at the Group’s web site at www.everestre.com.