Business-risk assessments identify potential hazards and their consequences. Companies of all sizes use them to try to reduce business risks, create disaster recovery plans, and also purchase insurance for what they cannot completely control. Small businesses have an especially pressing need for these assessments. According to the U.S. Small Business Administration, about a quarter of small businesses never recover after a disaster. Vulnerable companies need to identify potential problems in order to make plans to eliminate or cope with them. Of course, businesses also use this information to cover any risks that can’t be completely controlled with proper insurance.
Risk assessments spot potential problems, but a business-impact analysis identifies how these problems might affect a particular business. Since these two tasks go hand-in-hand, it is useful to describe them together. These are the three steps of a risk assessment and business impact analysis:
- Identify Hazards: This step consists of simply listing which business risks a particular company might face. These could include acts of nature, fires, mechanical breakdowns, and even cyber attacks.
- Identify assets that could be at risk: This step consists of identifying which business or external assets might be damaged by one of the hazards listed above. Some common examples are employees, customers, buildings, a business’s reputation, and the environment.
- Analyze the impact: The last step consists of figuring out what sort of harm could be done to the company assets. For example, the company could lose money in a lawsuit if a person gets injured; it could be fined for being out of compliance with regulations; or it might suffer a loss of customers after a cyber attack steals personal information from a sales database.
After analyzing all of these reports, whoever acts as the company’s risk manager can try to mitigate each risk. Of course, no company can take steps to totally eliminate every threat, but these are examples of good first steps.
Next, this assessment will help companies buy the right insurance to protect them against the things that they cannot control. The more steps that companies do take to minimize threats, the cheaper that insurance premiums are likely to be. Risks assessments and impact analysis can help prevent losses and result in lower insurance premiums. For more ways to improve your risk assessment skills, schedule a complimentary risk assessment today.
Who Can Help With Your Healthcare Business Risk Management?
ProAction Insurance provides risk management services to our clients. Our team of dedicated professionals make it their business to understand and reduce the risks that our clients face.
At ProAction Insurance, we’ve been in the business of helping hundreds of home health, home care and hospice companies manage risk for over a decade. Our compliance and analytical tools can help integrate risk management into every facet of your healthcare business operations. Find out more about our complimentary risk assessment and how we can make an impact in saving you time and money on your commercial insurance.