Practical risk management a necessity for any business ? Tri-Cities ...

By Brad Toner for TCAJoB

A risk manager / OSHA trainer friend of mine has the following message at the bottom of all his e-mails: ?The Cost of Accidents Greatly Outweighs the Cost of Safety.? Think of the economic, physical and emotional loss that can and does accompany an accident or loss. Any accident or loss that results in property damage, bodily injury or a monetary loss caused by an accident, an error in judgment or any multitude of reasons should generate the need for some risk management.

Brad Toner

Risk management?s main purpose is to reduce or eliminate the frequency and severity associated with risk. Bodily injury, property damage and economic loss are results of poor risk management.? Managing risk benefits everyone from the largest corporation to the parent watching her child drive away in the family car for the first time. Risk managers are trained to protect assets through identification and analysis of exposures, controlling those exposures, financing losses and implementing and monitoring policies and procedures. The key words that define the risk management process are identify, analyze, control, finance and monitor.

Practically, what can every company, manager, supervisor or person do to reduce risk?? To simplify the risk management process, consider the following three words: analysis, action, accountability.? Risk management can be reduced to this simple process.

Analysis requires that everyone apply common sense and a sense of awareness to all situations. This may require acquiring professional advice from safety officers, attorneys, engineers, or doctors when situations are more complicated. Being acutely aware of exposures that can cause a loss is everyone?s responsibility. A risk manager once told me that reacting to accidents and learning from them is important but creating an environment that analyzes incidents is even more important. Incidents are events that don?t result in a loss but could have. When an incident is observed it should be documented and the behavior or events that created the event evaluated. Have a sense of awareness and apply common sense to your personal and occupational situations.

Action requires that once you have a situation that results in a loss or incident that something has to change to prevent a potential loss. Not responding to a loss or incident is irresponsible and benefits no one. Let?s consider various actions that can be taken to reduce or eliminate a potential for loss. We can simply avoid the situation. Just never do it again. We can prevent the situation or incident with new equipment, procedures and/or safety standards. Reducing or segregating lowers the potential severity and frequency of losses and incidents. Most situations will require a combination of actions.

All the ?As? are important but without accountability, analysis and action will never happen or won?t be effective. Accountability establishes responsibility and consequences. Policies, procedures and rules will not be followed if they are not monitored, enforced and rewarded. Management must set the example and not just provide a verbal endorsement but be prepared to enforce and/or reward the policies and procedures to create an effective risk management culture. Establishing a culture or norm where safety and risk management are accepted and valued should be the ultimate objective. Under this scenario everyone takes responsibility for safety and risk management.

Let?s look at some examples of how analysis, action and accountability can and have been implemented.

One of the most emotional experiences that cause most parents some concern is when their children begin driving. The parent who flips the kid the keys and warns them to drive careful when the children know the parents drive fast, get speeding tickets and into an occasional wreck are probably going to experience some of the same. Counter this with the parent who is a responsible driver. The responsible parent sits down with the child and outlines what is appropriate behavior. They restrict driving initially until the child gains confidence and experience. They establish rules with consequences. For example,? any word of speeding or reckless driving will result in loss of driving privileges for a day. A speeding ticket results in a loss of driving privileges for a week and the second ticket a month. Wrecks will be evaluated based on the police report. The child must accept the rules but also know that the parent will enforce them.

I once had a business client that operated approximately a 100 vehicles. The majority of these were pickups. They continually had losses resulting from backing up. Two or three vehicles would show up at a site where work was being performed and when they left the drivers would back up without looking. Damage to company vehicles, other people?s property and some bodily injury claims were the result of the drivers not paying attention when they were backing up. The company took two courses of action. First, they put back up noisemakers on all the vehicles. Secondly, they bought fluorescent orange traffic cones for each vehicle and required that anytime a pickup was parked the cone was to be placed behind the pickup. This action required the driver ? before leaving ? to go behind his pickup and take note of what was behind the vehicle. The company then introduced accountability. Any parked vehicle that didn?t have a cone behind it resulted in loss of work and gradually increased it resulting in dismissal if the behavior continued. Backing up claim losses went to zero.

An orchard and grape rancher client was experiencing damage to his pickups by his irrigators. The costs of the vehicles were becoming prohibitive. On top of the purchase cost, there were costly repairs to the suspensions, engines and the vehicles? bodies and frames ? all caused by driving on the rough ranch roads. He sold all his pickups and bought 4-wheel-drive John Deere Gators.? Now Gators are a lot cheaper than pickups, slower, more economical to operate and they are designed to go over most rough terrain.? Not a single Gator has experienced any damage by an irrigator.

All of the scenarios above utilized the practical risk management process of analysis, action and accountability. Effective risk management doesn?t have to be complicated but it should be practiced.? Remember ?The Cost of Accidents Greatly Outweighs the Cost of Safety.? Be Safe!

Brad Toner is a managing partner at Basin Insurance Associates in Kennewick. He has been a licensed agent/broker since 1985. He is a certified insurance counselor and a certified risk manager.

?

?

?

---

by Mary Hopkin
Tri-Cities Area Journal of Business

This entry was posted on Wednesday, April 4th, 2012 at 8:25 am and is filed under Contributed editorial columns. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

davy jones love actually miesha tate vs ronda rousey idiocracy deep impact usssa baseball alex o loughlin