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WHAT IS RISK MANAGEMENT?

 What is Risk Management?

what is risk management

Introduction

Why Manage Risk?

There are many reasons to manage risk. Some of them include:
  • Saving resources: people, income, property, assets, time
  • Protecting public image
  • Protecting people from harm
  • Preventing/reducing legal liability
  • Protecting the environment

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How Does Insurance Work?


Insurance is a mystery to many people. Simply put, an insurance company pools the money of a large group and promises that if one of the group suffers a predefined loss, then the pool will pay for the loss.

Business owners and individuals trade off the affordable cost of insurance for the peace of mind that a large loss won’t mean financial ruin.

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Factors Affecting Insurance Premiums

Factors Affecting Insurance Premiums

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What is Risk Management?


Everyone knows what a risk is; we use the word everyday and we take risks regularly, whether we realize it or not. In every decision you make, when assessing the pros and cons, you are also doing a risk assessment. The challenge is to make it a more conscious process where your business is concerned.

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The Risk Management Process

  1. Identify Potential Exposures To Loss
  2. Measure Frequency and Severity
  3. Examine Alternatives
  4. Decide Which Alternatives To Use
  5. Implement The Chosen Techniques
  6. Monitor Results

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Steps to Implement Risk Management:

Risk Map
  1. Risk Identification [more]

     

  2. Quantify and Prioritize [more]

     

  3. Be risk sensitive, not risk adverse [more]

     

  4. Identify risk in business decisions [more]

     

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Risk Management Tips

  1. Keep Old Policies and Certificates [more]
  1. Insure to Value [more]
  1. ACV vs. Replacement Cost [more]
  1. Spend Money and Time on Loss Control [more]
  1. Protect Your Image [more]
  1. Don’t Hide Your Strengths From Your Insurer [more]
  1. Risk Management Attitudes [more]
  1. Cooperate Fully with Insurers/Brokers/Adjusters [more]
  1. Loyalty vs. Shopping Around [more]
  1. Insurance Renewals [more]
  1. Handling Accidents and Losses [more]
  1. Choosing Your Deductible [more]

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References

All information contained in this text is from Craig Rowe’s book Insurance Premiums Are Killing My Business! Controlling Insurance and Claims Costs for Small to Mid-Sized Business. 

For more information, visit ClearRisk's product page or contact us today! 

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