7 ways to give your business a professional look Risk Management:

Risk financingRisk financing involves strategies to pay for losses that cannot be entirely prevented by risk control. Suchstrategies can be broken down into two groups, retention and transfer.1. Retention – a decision is made to retain exposure to losses and pay for them by such methods ascurrent expenses, funded or non-funded reserves or by borrowing funds.2. Transfer – this method involves the transfer of responsibility of paying for losses to another throughvarious methods such as:Contractual transfer for risk financing – the transfer of financial responsibility of losses (but notthe legal responsibility) by written agreement to another party (often known as a „hold harmless‟or „indemnity‟ agreement).Commercial insurance - a contract (policy) that provides financial protection or reimbursementagainst losses. Commercial insurance policies can be written against many exposures includingdamage to property and loss of Business Income.Step No. 3 - Select the appropriate techniques (or combination)As avoidance isn‟t always practical and insurance costs money, professional risk managers often apply acombination of the above techniques to address potential loss exposures. For example, businesses canoften obtain discounts on insurance for instituting a mandatory risk control program.Step No. 4 - Implement a ‘risk management program’Once risk management techniques have been evaluated and selected, they must be implemented as a riskmanagement program. The important considerations are:1. What needs to be done? What are the details of the program?2. Who needs to be responsible? Accountability for implementing the techniques needs to be assigned toparticular persons.3. Communicate the program. Employees involved need to understand the exposures and how the programaddresses them.4. Allocate costs of the program – Often specific costs associated with a program (e.g., safety equipment)need to be spread over affected departments or business units and budgeted for accordingly.Step No. 5 - Monitor the program and modify as neededOnce implemented, monitoring a risk management program is an ongoing activity. Routine observation ofthe effectiveness of the program is imperative to determine whether progress is being made in addressingthe exposures. Measurements may show that further modifications are necessary to the program. Moretraining or safety measures may be required to reduce losses (both in frequency and severity).In today‟s highly competitive environment, the slightest oversight in business can have severeconsequences. Accordingly, all businesses, regardless of size, should have a risk management program andreview it on a regular basisArticle submitted by Garth Green of HJM Insurance & Financial Services Ltd.T h e F o c u s A u t u m n 2 0 1 1 | 15