The risk manager's hat: Does it fit?
Robert T. Horst
As a business owner, you “wear a lot of hats.” On any given day, you’re the CEO, providing the leadership, management, mentoring, all the while handling marketing, personnel, human resources, branding, sales, payables, collections, finances ... maybe even IT. Surely, one of the hats that you are wearing on a regular basis is that of risk manager. Does that hat fit you?
What are the risks that your business faces day to day? Of those, which risks go to the heart of the enterprise, i.e. which are the risks that, if mishandled, pose a risk to the existence of the business itself?
The risks you are managing may be best segregated by type. The most daunting of these is the so-called enterprise risks: large-scale, “bet the farm” type of risks associated with the viability of your company. They may include underinsured or un-insured lawsuits or losses, the loss of a competitive advantage, or even the loss of an anchor client or an invaluable, key employee.
Other types of risks that must be identified and managed include financial, information technology, insurance/hazard and safety. Larger businesses may have specific positions and individuals positioned for risk management specifically and the legitimately large organizations/corporations identify specific risk managers for each of these risks. Yet, of course, the smaller the organization, the fewer the “risk managers” – though the risks themselves remain.
Entrepreneurs and small business owners often share a characteristic: risk tolerance. The same type of mettle and courage necessary to start a business are usually what make that business thrive. There has to be a certain willingness to accept risk and uncertainty as a part of the everyday price of doing business. Nonetheless, every business owner, no matter how risk tolerant, also has a strong desire to identify and control risk, minimize expense and ultimately to maximize profitability with as few contingencies as possible.
Here are some tips and recommendations to help improve your risk management:
► Revisit your insurance coverages. Keep a strong, mutual relationship with an effective insurance broker. We strongly recommend that you request a conference with your broker to consider the scope and amount of the commercial general liability coverage, as well any other coverages you may have for your business, including workers’ compensation, property, EPLI, business auto, professional liability and health. Ask your broker about the applicable limits, and whether or not your business may be eligible for a premium discount from an underwriting perspective.
►Inspect the Premises. Inspect the entirety of your facility regularly (every site, if there’s more than one). Use your common sense and reduce or eliminate any safety hazards.
►Hold Harmless/Indemnity. This is a valuable method for the transfer of risk.
►Cyber-Security. Modern IT risk and the potential of a cyber-breach are significant issues for any business. Consider interviewing your IT professionals regarding protection against external threats and disaster protection. Moreover, cyber-security also comes in the form of insurance coverage for recovering from the breach or in the face of lawsuit by a third party.
For information on improving your risk management, contact Robert T. Horst at firstname.lastname@example.org or 267-898-0570.
Robert T. Horst is a partner in Curtin & Heefner LLP’s Litigation Section. Curtin & Heefner LLP is a regional law firm with offices in Morrisville, Doylestown and Lawrenceville, N.J.
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