Management of insured risks

Management of insured risks

management-insured-risks

Insurance is a way of transferring your risk to somebody else (an insurance company) who will compensate you should the risk event occur, in return of a premium. One of the factors affecting the premium is the loss history both in terms of how often the event has occurred and how large the loss has been in financial terms. Premiums are often reduced by offering of no claims discount. That means that if you have not had any claims for a certain number of years you will get a discount on your premium.

Reasons for Insurance

Although insurance is there to protect your bottom line if the event occurs, it is in your interest to get the business up and running as quickly as possible, and to get the disruptive event (the claim) out of the way so your business can concentrate efforts on business as usual and working towards achieving the objectives. It is also in the insurance company’s interest to get your business up and running quickly, not only to contain the cost of the claim but also to ensure that your turnover remains consistent and to secure your continued business.

Control the claim and quickly get back to business as usual

There are a number of risk management actions that can be taken to reduce both the likelihood of the event occurring and the extent of impact if and when it does happen. The latter can be illustrated using an example of a cafe having had their kitchen destroyed due to flooding. The cafe had carried out basic risk management and identified that loosing the use of the kitchen was a major risk for them. In order to make sure that they could still continue to serve its customers in the event of not being able to use the normal kitchen, they had put a business continuity plan place of setting up a temporary kitchen in an adjoining building. When the flood caused the closure of the cafe’s kitchen, they could simply turn to their business continuity plan to ensure continued turnover as well as continued happy customers. It reduced the extent of business interruption and the cost of the claim was controlled.

We can work with you and your insurance broker

Other areas where risk management techniques can be applied to insured risks are in prevention and controls as well as analysing how to manage risks excluded in an insurance policy. We can work with you and your insurance broker to help with the management of your insured risks.

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