Risky Business: Insurance and risk management best practices.

• Author: Barbour, Tracy
• Position: INSURANCE

Risk management--the process of identifying, assessing, and prioritizing the different types of risk an organization might encounter--is essential to the success of any business. However, companies can employ various insurance products and prudent practices to minimize their exposure in the workplace.

Generally, risk management involves avoiding or eliminating the vast number of events that could have an adverse impact on a business. The events could negatively affect everything from personnel safety and wellness to a company's day-to-day operations and overall financial performance. More specifically, risk management entails identifying hazards (something with the potential to cause harm), assessing the associated risk (the likelihood of that potential harm happening), minimizing any risk deemed unacceptable, and then controlling the situation to mitigate any remaining hazards.

To Jana Smith, the managing partner in Parker, Smith & Feek's Anchorage office, risk management is a culture that companies create from the top down. "It's overall providing a safe environment for your employees to grow and have a positive experience in the workplace while a; the same time achieve work-life balance," says Smith, CPCU, ARM, CIC. "At the end of the day, I want my employees to come to work and be happy to be there. I want it to be comfortable and a place that they're glad to come to every day."

Employees, an Essential Element

Regardless of the industry or work environment, all businesses are exposed to varying levels of risk. And risk assessment is an integral part of managing that exposure. While there are no set rules on conducting a risk assessment, the process often includes determining potential hazards, analyzing what could happen if a hazard occurs, and defining effective control measures.

While assessing risk is an important component of the risk management process, businesses should start by listing every potential risk, says Chris Pobieglo, president of Business Insurance Associates. Then they can get into a deeper level of assessing each risk and looking at how likely it is to happen and its impact. "Then you'll have to make decisions about prioritizing where you want to put your resources and time," he says.

It's critical that risk assessment be consistent, systematic, and conducted in the correct context. In addition, all potential hazards should be documented--no matter how improbable and low-risk they are. Ultimately, risk assessment--when done effectively--can give businesses a valuable tool for deciding which risks they are prepared to accept based on their policies and standards.

The most impactful factor in managing risk in the workplace is employees--not the environment, according to Pobieglo. Businesses can manage their environmental risk, but it takes people to identify when there are deficiencies and to resolve those deficiencies. And it's essential...