John Ritenour, a leading authority in risk management systems, recently spoke at the International Association for Financial Planning conference about the importance of risk management and how it can help to avoid liability. John has been an industry expert for over 10 years and is currently serving as President and CEO of John Ritenour & Associates. John began his speech by explaining that “risk management” means different things to different people because there are so many types of risks:
– Business Risk: Protects against financial loss or other business disruption
– Personal Risk: Protects individuals from unforeseen events such as illness, injury, or death
– Legal Risk: Protects companies from lawsuits where they may be found liable based on their actions or inaction
– Environmental Risk: Protects companies from being accused of polluting the environment
– Financial Risk: Protects companies by providing insurance to cover property loss or liability claims against them
John Ritenour also said that risk management covers two types of systems. The first type is an “administrative” system, which measures existing hazards and employee safety. The second type is a “prevention” system, which measures and manages risks to avoid accidents and injuries.
Before getting into either of these systems, however, John Ritenour stressed the importance of determining whether any risk management systems are even necessary for your company:
– Evaluate Current Conditions: Gather information on current conditions including past expenditures, losses, and lawsuits .
– Perform a Risk Analysis: Gather information on the type of risks your company is facing and which employees are impacted most. You can then determine what additional resources you may need to be included in your risk management system. These resources may include solutions such as loss prevention strategies, insurance policies, or employee training programs. Some companies, for example, require all employees to learn CPR.
– Formulate a Plan: Determine how much risk your company can afford and form a plan based on these results.