Risk Mitigation and Forward Planning

A good business operation will have a sound understanding of risk mitigation strategies to offset its exposure. So what separates a good business from a great business when it comes to risk mitigation?

The difference between a good business and a great business operation when it comes down to risk management, can be its advanced level of understanding of its exposures and implementation of key risk management strategies to help mitigate those risks.

A good construction business for example may accept the fact that accidents can happen on site and rely upon a broad Contract Works & Public Liability policy to help assist them during their time of need.

A great construction business will understand and identify key exposures, assess its required action plan, control risks where possible and constantly review its strategies in place.

Example 1.

Contractor John Smith of ABC Pty Ltd is responsible for alterations/additions to a home and experiences $40,000 roof damage caused by a hail event.

Good Business Operation: Reacts and lodges Contract Works claim with its Insurer for roof damages sustained during the hail event.

Great Business Operation: Forward plans and reviewed weather patterns prior to any roofing works and mitigated its risk where possible by offsetting any roofing works during the possible weather event, minimised extensive damage by covering up exposed areas if unexpected weather was unavoidable, had a response team and plan in place should swift action have been required, had its policy documents readily available to liaise with a respective claims professional should the need arise.

Example 2.

Contractor John Smith of ABC Pty Ltd does not lock the site security gate at night leaving a wandering trespasser to fall into an unprotected void causing the intruder to break their leg. Although the stranger was trespassing, the fact that an injury has occurred on site from a third party, especially when a site security gate was not locked exposes the construction entity to a public liability claim.

Good Business Operation: Reacts and lodges a Public Liability claim with its insurer for third party bodily injury.

Great Business Operation: Forward plans and created an action plan in the event of an accident, understood key hazards such as a trip or fall on site and had key preventative measures in place such as appropriate signage, adhered to site safety by covering up exposed areas such as voids as required by law, ensured the site was locked with secure fencing, educated employees on risk management plans and strategies to help minimise accidents on site.

There is no limit to how many steps a great business must have to minimising its exposure.

In both examples the variances can be viewed in their respective levels of preparedness. A proactive business will go a long way with risk management and control measures as opposed to a business which reacts after an event has occurred.

Remember to plan ahead when it comes to risk and exposure!

This can be the difference maker especially during unprecedented times when most businesses are watching their bottom line and cutting costs.