Risk Mitigation: What Is It and How Can You Do It?
In the world of insurance, you often hear the term ‘risk mitigation.’ But what does it mean? Let’s talk about risk mitigation: What is it and how can you do it well?
There’s no one better to ask than Brenda Jo Robyn, Founder of Competitive Edge Insurance. Here, we hand over the mic as she tells you what you need to know about risk mitigation as a business owner.
What is Risk Mitigation?
In its simplest terms, risk mitigation is anything an employer can do to make sure that they’re low-risk and not high-risk. When we say low-risk here, we mean not likely to result in failure, harm, or injury.
Still not sure about what high-risk is? Check out our blog to learn what classifies high risk.
Common Business Risks
According to American Express, the most common types of risk when it comes to running a business include:
- Economic Risk
- Compliance Risk
- Security and Fraud Risk
- Financial Risk
- Reputation Risk
- Operational Risk
- Competition (or Comfort) Risk
We know, it sounds scary knowing that there are so many risks out there. But don’t worry—below we’ll explain tangible steps you can take to mitigate your risk.
What Can Business Owners Do to Mitigate Risk?
So, how can you mitigate risk as a business owner? There are many things that you can do to mitigate risk within your company.
Below we are going to list the top five most impactful things you can do to mitigate your risk.
Ensure You Have a Stable Employee Population
Firstly, ensuring that you have a stable employee population is crucial to your risk mitigation strategy. Having a secure and stable employee base also includes having a low turnover rate.
But how can you achieve this?
Brenda Jo recommends putting incentives and benefits in place to retain your employees. As an employer, you should additionally emphasize training.
Secondly, give your employees accolades when they’re due. Tell them how appreciated they are, and give them more responsibilities as their time with you increases.
“A lot of employees just want to know that they’re wanted,” says Brenda Jo.
The second piece of the puzzle is to make sure that you’ve implemented a strong safety program. Depending on your industry, this might include:
- Safety Meetings
- Safety Tests
- Proper Safety Equipment and Tools (i.e. safety goggles, safety shoes)
The bottom line here is to provide resources and do whatever you can to prevent employees from getting hurt or sick.
Take a non-construction environment for example. You might work in an office building. As an employer, it would then be your responsibility to make sure that carpets are stapled down or secured with sticky tape underneath so that employees don’t trip. Easy!
In general, when it comes to safety, “what I would suggest,” says Brenda Jo, “is that you work on it with your broker starting 90 days out.”
In general, a good rule of thumb to follow is DON’T wait until the last minute to mitigate your risk. (Trust us, it’s not worth it!)
Here are some questions to get you started. Ask yourself:
- What’s coming?
- How are things changing?
- What can we do to save money?
- What can we do to place ourselves in the best risk?
Invest in Insurance
Making sure your business is properly insured is arguably the best way to mitigate risk. There are many different types of insurance that your business might need or benefit from.
Some types of insurance for businesses include:
- General Liability Insurance
- Commercial Property Insurance
- Workers’ Compensation Insurance
- Commercial Auto Insurance
- Cyber Liability Insurance
- The list goes on!
Insurance requirements vary on a state-by-state basis as well as an industry basis. Be sure to speak with a professional—like our team at Competitive Edge—to learn what you need to protect your business. Read on if you’d like to hear about four types of insurance coverage for your business.
Consider Planning that Can Be Done in Advance
Considering carriers, what kind of planning ahead can you do as an employer? Do you want to partner with a carrier that is going to help you year-round to make you more risk-tolerant?
If so, this carrier might be coming in to do inspections every other month, giving you recommendations on how to improve your site or how to improve your training, and the list goes on. The best part? Brenda Jo says that this type of support is typically free of charge if you get with the right carrier.
Take advantage of the resources available to you!
Implement a Safety-Incentive Program
What is a safety-incentive program?
The Occupational Safety and Health Administration, more commonly known as OSHA, recommends safety-incentive programs, which reward “workers for reporting near-misses or hazards.”
Safety-incentive programs typically reward employees for reporting unsafe conditions, making the workplace safer altogether.
Programs as such “provide positive reinforcement for reporting illnesses and injuries.”
A Final Word
Don’t let risk mitigation slip by the wayside. After all, proper risk mitigation helps to reduce your insurance costs. And let’s face it, who doesn’t want to benefit from lower insurance costs?
Interested in learning more? Read on to learn what to expect in terms of premium increases and risk mitigation this year or about insurance requirements for business owners.