how to create a strong risk management plan for your business

All businesses are exposed to at least some risks, and it’s important to plan for these potentialities with a risk management plan. Whether you run a small business or a major corporation, the need for a risk management plan and general steps to create one are the same.

Why Are Risk Management Plans Necessary?

Just as other aspects of a business are planned out, how a business would respond to a crisis needs to be thought about and detailed. Even though this is something you may not want to think about, a risk management plan is as necessary to your business structure as planning your quarterly business goals. The plan should detail what actions should be taken in the event of a potential disaster, as outlining that before something happens can mitigate the effects of a disaster.

In some cases, having a strong risk management plan in place is the difference between surviving a disaster and shutting a business’s doors because of one.

What is a Risk Management Plan for My Business?

Exactly what a risk management plan looks like varies from one business to the next because these plans are tailored to businesses’ situations and risk exposures.

An example of a risk management plan for a major corporation might include a phone tree to contact affected personnel, a plan for shifting operations between locations, details on how to resume IT operations and much more. A plan for a small business might be much simpler, detailing how a single business owner will contact customers, file an insurance claim and determine what operations must be resumed immediately. 

How Can Business Owners and Leaders Create a Strong Risk Management Plan?

Creating a strong risk management plan is a multi-step process, and each step requires sufficient consideration. Often, outside consultation is needed.

Conduct A Risk Analysis Assessment

First, businesses need to conduct a thorough risk analysis assessment. This should detail potential disasters, and it may note how likely different situations are. While there are general business threats (lawsuits, fire, accidents, etc.) that could affect any company, the more specific details may depend on what type of business you own. The risk analysis assessment will allow you to identify and rank these threats 

A commercial insurance agent is a useful person to consult during this initial step. Not only will they be aware of the common risks that businesses face, but they’ll also likely have heard of some more unusual events that interrupted businesses’ operations.

Plan A Chain Of Operations

Second, a detailed plan on how to ensure the safety of personnel and the security of assets is needed. This part might include emergency contact information for employees, phone trees to contact employees and explanations of who would be responsible for securing different assets the business owns.

Assume You’ll Need Options

Third, a plan on how operations will be resumed should be developed. This often includes both how updates will be communicated to customers and what alternative possibilities can be used to resume work when normal facilities, equipment or people are unavailable.

Get Coverage Before You Need It

Finally, measures should be taken to minimize the potential negative effects that a disaster could have. One of the most effective ways to mitigate effects is to get business insurance coverages, such as commercial property insurance, business interruption insurance and other similar policies. An agent can help determine exactly what insurance policies make sense in light of a business’ particular risk exposure.

Develop a Risk Management Plan for Your Business

Disasters strike businesses of all kinds, which is why every business needs a risk management plan. To create one:

  1. Conduct a risk analysis
  2. Plan to ensure the safety and security
  3. Plan to resume operations
  4. Purchase insurance to mitigate risks

If you need help with risk assessment or finding insurance, contact an agent at Marine Agency Insurance. Our agents can help both identify risks and find coverages to protect against them.

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