How Risk Management Adds Value to Organizations

Oct. 18, 2000
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

About the Author

EHS Today Staff

EHS Today's editorial staff includes:

Dave Blanchard, Editor-in-Chief: During his career Dave has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. In addition, he serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

Adrienne Selko, Senior Editor: In addition to her roles with EHS Today and the Safety Leadership Conference, Adrienne is also a senior editor at IndustryWeek and has written about many topics, with her current focus on workforce development strategies. She is also a senior editor at Material Handling & Logistics. Previously she was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck?, which made the Cleveland Plain Dealer's best sellers list.

Nicole Stempak, Managing Editor:  Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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