How Risk Management Adds Value to Organizations

At a session on risk management\r\nat the NSC Congress in Orlando, Fla., a risk management professional gave\r\nattendees techniques for risk control.

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Risk managers employ risk control techniques to minimize unintentional loss cost effectively. At a session on risk management at the NSC Congress in Orlando, Fla., Bruce Fyfe, CSP, senior vice president and manager of AON Risk Services, Costa Mesa, Calif., gave attendees techniques for risk control.

Fyfe outlined five methods for risk control:

  • contractual transfer;
  • exposure avoidance;
  • loss prevention;
  • loss reduction; and
  • segregation of exposure unit.

"Contractual transfer is an easy way to eliminate risk," said Fyfe. "It can be controlled through leasing equipment, or employees, using subcontractors, outsourcing jobs and incorporating your company."

In terms of exposure avoidance, Fyfe said don''t buy, don''t sell and avoid the situation entirely to control risk.

In some cases this is not feasible, therefore, loss prevention is an important way to reduce risk.

"Hazard reduction and elimination, programs aimed at preventing loss, safety programs, driver programs and quality programs such as ISO 9000 and 14001 are helpful actions for loss prevention," said Fyfe.

Since risk management is about minimizing loss cost effectively, Fyfe noted that programs to reduce and control dollar amount of losses are important. Fyfe said it is companies should try to reduce and control property losses, bodily injuries and liability claims.

Segregating exposure is an important risk control technique, said Fyfe. "Don''t put all your eggs in one basket," said Fyfe. "For example, try not to build important production buildings for one company next to one another, don''t allow key employees to travel together and keep critical processes separate."

by Virginia Sutcliffe

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