Managing your risk-management team: assign a devil's advocate.

• Position: Indiana SMALL BUSINESS REFERENCE GUIDE

When putting together a team to audit your company's risk-management procedures, you might consider the following advice: assign a devil's advocate. Most experts on group dynamics espouse this advice. Leaders in the field of managerial group process suggest that success is derived from teams: which are diverse, lack one dominant voice, have clearly delineated decision rules, provide political cover to allow diverse opinions to flourish, and ensure expert opinions are represented (even if this means employing outside advice or counsel).

For business owners and company finance professionals, the annual audit process requires a great deal of time and attention. The annual insurance renewal exercise, when it overlaps with the financial accounting audit process, can distract professionals from doing both tasks most effectively.

When forming your risk-management team, I suggest that you assign a risk-management expert (this might be someone charged with safety duties who has a solid understanding of finance) and consider working with your insurance agent or adviser to create an expiration date which better matches your internal labor resources. When making this change, it is important not to do it piecemeal--your expiration dates for all lines of coverage should be on the same date to avoid dangerous coverage gaps.

You might also consider seeking a third-party audit of your insurance and risk-management procedures. Safety consultants are experts in their field and can make a very meaningful difference to your business in preventing loss. Likewise, when our agents and consultants are asked review insurance policies, we often uncover deficiencies.

The most common areas we find where insurance coverage needs to be fixed are the following: policy limits which need to be updated, little or no...