Effective Risk

Management Plan: Why Is

It Important for Your
Business?
Oct 15, 2013 2 minute read

All businesses and non-profit organizations face the risk

unexpected events, such as a natural disaster, loss of funds
through theft, or injury to staff, customers, or visitors on your
premises, could impact operations. Any of these events can cost
your organization money or cause your organization to
permanently close.

With a risk management plan, you can prepare for the unexpected,
minimizing risks and extra costs before they happen. By
considering potential risks or events before they happen and
having a risk management plan in place, you can save money and
protect your organization’s future.

What is risk management? Risk management is the process of

identifying possible risks, problems or disasters before they
 happen. This allows business owners to set up procedures to avoid
the risk, minimize its impact, or at the very least help cope with its
impact. A business or organization should make a realistic
evaluation of the true level of risk and plan accordingly.

What should a risk management plan include? A successful risk

management plan should recognize and address potential risks and
threats. These plans don’t have to be expensive or very time
consuming. The risk management process can be as easy as
answering the following few questions:

Risk Management Process:

Questions to Answer
1. Risk identification – What can go wrong? (Risks can apply to
your workplace or from the particular work you do)
2. Risk analysis – How will it affect us? (Consider probability
and impact to your operations – is it high or low?)
3. Risk control – What should we do? (Both to prevent the loss
from occurring or to recover if the loss does occur)
4. Risk treatment – If something does happen, how will you pay
for it?
 Risk Management Plan: What All
it Should Include?
 A commitment from all levels of the organization
 Policies and procedures established and clearly defined for
all staff
 All staff should have clearly defined roles, responsibilities,
and accountability
 Adequate resources and tools  allocated for the plan
 Ongoing training, testing and monitoring of the risk
management plan

What are the benefits of a risk

management plan?
 Saving valuable resources: time, income, assets, people and
property can be saved if fewer claims occur
 Creating a safe and secure environment for staff, visitors, and
customers
 Reducing legal liability and increasing the stability of your
operations
 Protecting people and assets from harm
 Protecting the environment
 Reducing your threat of possible litigation
 Defining your insurance needs to save on unnecessary
premiums

Insurance and risk management

systems
Purchasing the appropriate insurance coverage for your business is
an important part of your risk management plan, but it’s not
enough by itself. You still must have policies and procedures in
place to reduce risks to ensure your assets, reputation, financial
security and operations can continue without interruption.
Insurance companies may view your organization more
favourably if you can prove you have a stable risk management
plan in place to minimize the impact of potential claims. It could
even help you qualify for reduced insurance premiums. To learn
more, speak with your local BrokerLink broker.