Seven Risk-Management Resolutions for 2009

With a tough economic forecast front and center, these seven risk management resolutions can help you improve your bottom line. 

• Tie risk management to corporate solvency. This means senior management must embrace risk management and drive it down into the organization. This can easily start with one simple step. Begin each staff meeting, no matter what level, with a safety update. Let managers outline the facts about any injuries or accidents and most important, what has been done to ensure these incidents do not recur. Then, tie safety or its lack to tie to performance. Once employees understand that a loss will hit them in the terms of raises, they will take safety much more seriously.
• Evaluate the indirect loss costs associated with each injury or accident. In other words, don’t just assume, after an employee tears a rotator cuff lifting an engine, “The insurance company paid $75,000.” Count the indirect costs, such as the loss of morale, the cost of any damaged equipment or supplies, the administrative and other time spent by employees dealing with the incident or discussing it, the cost to hire replacement help if needed, and the cost to replace the employee if in fact he or she did not return to work. Then, make sure the true cost of the incident is disseminated to your managers and supervisors. Only when an organization considers the total costs of workplace incidents will safety become a priority.
• Take the rifle approach to safety. Once we closely review our loss history, we may panic. “I have to fix everything!” we may believe. If we cling to this thinking, then we risk taking a shotgun, scattered approach to safety and loss prevention. Stay calm. Simply sit down with your broker or agent and a copy of your loss runs that categorize your losses by type, for example, all back injuries, their cost and which department they occurred in. By analyzing them, you can begin to see where you need to target your safety programs. Microsoft Excel is miraculous for slicing and dicing information with pivot tables that can greatly enhance the analysis of your claims history. Only by focusing on troubling loss trends will you be able to lower your losses and hence, your premium.
• Prepare now for the hard insurance market. There is little doubt that with reinsurance profits plunging after a dismal 2008, a hard market is right around the corner. When the market becomes more competitive, only organizations with well-run safety programs and a stellar loss history will find carriers competing for their business. Companies will higher losses may be forced into buying coverage from carriers who may write more restricted, more expensive coverage.
• Buy employment practices coverage. If you employ personnel and lack employment practices liability (EPL) coverage, your business solvency is at risk. Employment actions are heating up, especially with the lagging economy, which eliminates many possibilities for job seekers. The EEOC reports a 15.2 percent increase in employment-related claims from fiscal year 2007 to 2008. Costs solely to defend wrongful termination or other discrimination claims can bankrupt a company.  Investigate employment practices coverage. The peace of mind will be worth the premium.
• Eliminate dead weight. Once your EPL coverage is in place and you are careful to document your decisions, determine your stellar performers. The employment picture is bright for employers. Strong applicants will bang on your door in this tight economic time, so ensure that employees who underperform or repeatedly perform unsafely begin on the progressive discipline road to a new career. In the long run, you are doing both them and your organization a favor. Once you make the decision to terminate someone who has been a bane or unproductive for years, you’ll ask yourself, “Why did I wait so long?”
• Rely on your broker or agent. How many times does a simple reboot fix a computer problem? According to the Non-Profit Risk Management Association, rebooting your relationship with your broker may an important boost your business needs.

2009 will no doubt be another banner year for business failures. Bulletproof your business by instilling the risk management mindset in all your employees to enhance your profitability. Your business survival may well depend on it.