As I travel around the country meeting with clients to relay my passion for risk management and loss reduction, I often hear, "But we're just a small business and we have to focus on profitability." My next questions are, "Isn't your business susceptible to losses? Can't your employees be injured? And can't your business be sued or might your building burn down?" Of course these things can happen, and any single event would be more devastating to a small business than a major corporation. Being properly insured is certainly a key to proper risk management, but the hidden costs of an accident can far exceed what is covered by insurance. Basic loss reduction efforts are much more important. There are four basic steps to follow to see that you are properly managing your program.
1. Identify Risks
For every aspect of your operation, list potential sources of risk, such as vehicle operations, lifting, slips and falls, contracts, etc. Research any area that could potentially result in an employee injury, a lawsuit or other threat to business. Assistance may be found in insurance company reports, previous accidents or insurance claims and national statistics.
2. Evaluate Risks
Each identified risk should be evaluated on both frequency and potential severity. The risks with the highest frequency and severity should be addressed first.
3. Develop Controls
Once you've identified and evaluated the threats to your business, controls for each risk should be developed. This can take the form of a new policy, training, inspection, outside review or any other means to reduce the potential severity or frequency of the individual risk. Sometimes, the risk can be totally eliminated. Assistance in developing these controls can come from many sources, including your insurance provider as well as state or federal agencies. The U.S. Small Business Administration provides a great deal of information on workplace safety laws on their website. The Occupational Safety and Health Administration offers a detailed safety handbook that covers a wide variety of subjects for small businesses. National Institute for Occupational Safety also provides a number of safety resources. The focus here is, don't go it alone. There are many sources of information—available at no cost—that can greatly assist you.
4. Monitor
Once you have everything in place, the only way to be certain your plan is effective is to monitor. If changes are necessary, follow through, then continue to review and assess how the initiatives are working. All too often, companies don't monitor their programs and become frustrated when their efforts fail in the long run. Following these four steps is a great foundation for your safety and loss reduction program. Companies that have very few incidents don't depend on luck. Being loss-free is hard work, but it can ultimately have a large impact on your company's bottom line.
