What Is Risk Management? 

Every business has some level of risk, which can include accidents involving property, employees or third parties, cyberattacks and business interruptions. Businesses must prepare for potential incidents through risk management.

Risk Management Process

The risk management process typically consists of the following five steps.

1. Identify risks. The first step is to identify as many potential risk exposures as possible. Each business will have unique risks to its operations. For example, a restaurant will typically have more and different risks than a law office. Consider the following categories of risk:
   • Hazards (e.g., fires and employee injuries)
   • Operational risks (e.g., turnover)
   • Financial risks (e.g., economic recession)
   • Strategic risks (e.g., new competition)
2. Analyze and prioritize risks. Once you’ve identified the potential risks your business faces, you should determine their potential consequences. For each risk, determine how likely it is to occur and potential ramifications (e.g., reputational damage and financial loss).
3. Examine solutions. For each risk, determine potential solutions to help avoid or manage the risks. 
4. Implement solutions. Once you choose risk management solutions, it’s essential to implement them. This typically includes training your workforce on safety procedures.
5. Monitor the results and reassess. Once you’ve implemented risk management solutions, it’s essential to monitor their effectiveness and reassess your needs consistently.

Learn More

An important way to manage your risks is to obtain a robust business insurance policy. For risk management solutions and business insurance near you, contact Lyceum Insurance Services.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.