In today’s turbulent business climate, can your organization ignore risk management? Every organization must consider risks seriously, whether you are a two-person shop or a major corporation reporting to stockholders. Who in your organization performs this function?
Many organizations have an employee who wears many hats, and usually, organizations place insurance, safety and risk management responsibilities with either a finance person or, in larger organizations, a personnel director. That decision may work if you have a small organization, but as your business grows, so do your assets at risk and your loss exposures.
A risk manager analyzes an organization’s core business functions to determine insurance coverage needs and to reduce risk. To analyze coverage, the risk manager must examine the organization’s current and impending activities to determine if those endeavors are covered adequately under its current insurance policies. For example, a few months ago I heard from a frantic
The risk manager often becomes to “go-to” person in an organization when employees see trouble on the horizon. “Can we do this?” is a question the risk manager must answer frequently. A risk manager’s job is rarely to say “no.” Instead, the job often requires imagination and innovation to answer the question, “How can we do this?”
A risk manager’s job may involve working with line supervisors to ensure employees are following safety procedures. If you have no written personnel or safety procedures, a risk manager will work with peers to develop them for your organization. Personnel issues such as sexual harassment or potential dismissals may, in conjunction with human resource officers, involve the risk manager. Training, such as supervisor safety training, will probably fall to a risk manager. OSHA and safety inspections and adherence to safety policies are a regular part of the risk management function, as well. Managing claims is an integral part of the insurance function. The risk manager works with other managers to ensure all losses, whether injury or property damage, are reported timely to insurance carriers. Developing a reporting procedure for all claims to guaranty prompt claims reporting is critical to accident management.
Educational backgrounds vary among risk managers. While most hold at least a bachelor’s degree and professional accreditations such as the Associate in Risk Management developed by the Insurance Institute of America, the major issue to consider is the ability to think creatively to embrace where appropriate, to mitigate or to avoid risk. While a risk manager must be able to interact with senior managers and board members, he or she must also be comfortable with line employees, where safety problems occur most frequently. If you must make a choice, choose excellent communication skills and good common sense over technical training.
When is it time to consider either hiring a risk manager? There are “rent-a-risk managers” who will consult with your organization for a monthly or annual fee. However, if the potential savings a risk manager offers your organization exceeds his or her salary, given an acceptable rate-of-return, your organization should strongly consider hiring a risk manager.