Insurance Matters

What is Risk Management

Risks affecting individuals and organizations can have consequences in terms of economic performance and professional reputation, as well as environmental, safety and societal outcomes. Therefore, managing risk effectively helps individuals and organizations to perform well in an environment full of uncertainty.Organizations of all types and sizes face internal and external factors that influence whether they will achieve their objectives. The effect this uncertainty has on an organization's objectives is "risk".

All activities of an organization involve risk. Organizations manage risk by identifying it, analyzing it and then evaluating whether the risk should be modified by risk treatment in order to satisfy their risk criteria. Throughout this process, they communicate and consult with stakeholders to review measures and controls to ensure that no further risk treatment is required.

Risk Management Tips:

ASTTBC recommends that all members adhere to the following risk management tips:

  • Complete a thorough and comprehensive loss analysis. It is important that companies learn from past experiences, and apply these to the future. Companies should utilize their resources by allocating them to the areas that are most effective.
  • Contact and engage with various insurance carriers, agents, and trade groups that will offer potential sources of information and assistance.
  • Instill and implement a strategy for managing change. It is also important that you confront these changes up front, to reduce risk management expenditure and prevent losses.
  • Educate staff on the fundamentals of risk management. Decision-makers who are knowledgeable about the purpose and benefits of risk management can be a business owner’s best ally.
  • Obtain adequate insurance; know the terms of your insurance particularly exclusions and limitations. You should read your policy carefully, ask if you do not understand any part of it.
  • Practice within the Discipline and Technical Specialty for which you are qualified to avoid invalidating your insurance. Do not oversell your experience and make sure you practice within your capabilities. Printed material including web sites should be accurate and up to date.
  • Use a suitable contract form and ensure all change requests are transacted in writing, if the contract is provided by your client make sure you understand all of the obligations it seeks to impose on you and that you can fulfill them; Use of written agreements should never be considered an option: they are a must!
  • Communicate clearly, poor communication can result in claims, but faulty records and inappropriate messages can make a bad situation worse, by making it impossible for an insurer to mount an effective defense, even against claims with little or no basis in fact.
  • Conduct a self-assessment; know your strengths and weaknesses and those of your employees. Create additional systems to manage issues. For example if numbers are not your strong suit take extra care to check them or have someone else check them.
  • Avoid conflicts of interest. You must disclose if there is any relationship between you and another company particularly if you are recommending a contractor or supplier.