If you think the cost of claims and incidents within your organization is too high, it’s time to address that problem. But how can you know what steps to take when all you have is an overall number? By breaking down occurrences by location, department, division, and so on, it will be easier to figure out the root of the problem and work towards solving it. That’s why it’s important to make these individual units accountable for their costs.
There are four main strategies to making these units more responsible:
1. Make risk management part of your organization’s culture.
Emphasizing risk management and its benefits to your employees will make them understand why it is so important and be willing to monitor it as part of their day-to-day work. Consider risk in all of your business decisions, and be sure that executives and employees alike have a thorough understanding of the dangers and opportunities that result from your unique risk landscape. Not only will this make managing your risks seem second nature, it will also simplify the assignment of accountability.
2. Assign risk ownership.
Every risk in your organization should have a risk owner. This owner should be in charge of monitoring the risk’s frequency and severity, implementing mitigation measures, and responding when something goes wrong. When possible, companies should hire a risk manager to oversee all risks full-time. While they can look to managers and other senior employees to explain an above average claim frequency or cost, the risk manager is responsible for identifying and dealing with all risks consistently. Assigning ownership ensures that no risk will be overlooked, forgotten, or mismanaged.
3. Analyze records for trends.
It’s one thing to know that your company spends $100,000 on claims per year. It’s another to know that 50% of these costs happen in the same location, at the same time of year, or within the same department. The first fact is helpful for accounting purposes, while the second is useful for risk management. Once you’ve determined what is causing the majority of your losses, a solution may be fast and inexpensive to implement. If you have the data, you can speak with the relevant group to understand what’s going wrong and how you can work toward improving it together. Without analyzing your records, you may target the wrong issue or encounter defensive employees.
4. Implement software that tracks users.
If you have an informal claims and incident reporting system, it is easy to lose track of who documented a particular piece of information. This can lead to an incomplete understanding of your costs and who is responsible for them. One of ClearRisk’s benefits is its integrated user system: it tracks who input an incident, who it was communicated to, what occurred, and what steps are to be taken. This creates an enterprise-wide understanding of who owns the risk, allowing management to understand whom to hold accountable for the cost. Then, an effective mitigation technique can be used to prevent the loss from reoccurring.
Once you have a more complete understanding of where your costs are coming from, you will be able to implement efficient and affordable prevention strategies. And if every area of the business understands the importance of risk management and that they can be held accountable for high costs, they will pay more attention to their performance and actively work toward mitigating incidents as much as possible. Your executives, your financials, and your insurance provider will thank you.
For an example of how ClearRisk's software can be used as described above, read our City of Saint John case study! With trend analysis, the City was able to reduce their claims costs by 50%, saving hundreds of thousands of dollars.