The One-Two Punch of Risk Management

The One-Two Punch of Risk Management

Managing risk involves identifying hazard exposures, and reducing the frequency and severity of an occurrence (injury, damage, etc). The Holy Grail of the safety professional is the pursuit of zero incidents. Some hold fast to the philosophy that zero incidents is an achievable goal, and in some cases it is, but not forever. Hats off to those companies that can claim “a million plus hours of no injuries” but the difficult part is to sustain that accomplishment indefinitely. Unless human behavior (error) can be completely eliminated from the system, an incident is just a matter of time.

Unfortunately, incidents are inevitable and conceding to that fact is not a defeatist mindset. So organizations circle the wagons and use the tools they have to manage risk. To keep risk under control businesses need to employ a one-two punch approach.

The first punch is the front-end of risk management and involves the development of safety systems, policies, procedures and protocols. These are employed by front-line workers and delivered by supervisors, management and the resident safety professional. The absolute goal of this first punch is to create a work environment and workplace culture that molds behavior through communicating expectations and establishing accountability. Safety must be equally important as production and quality. Punch number one must do everything it can to reduce the likelihood of a loss, claim or incident.

Punch number two comes on the back-end and is used to counter a failed first punch. Punch number two is insurance. A well-managed insurance program limits liability and can prevent a company from financial failure. The keys to insurance are many as the risk manager is constantly balancing the cost of insurance with risk reduction. The most important thing about insurance is to have it when you need it by not letting a policy lapse. Some of the primary considerations for insurance include:

When properly designed and executed the one-two punch of risk management is a critical tool to ensure the viability of a company.

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