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Intro to Risk Management/Controlling Losses, Part I

Risk management in and of itself is not a new concept, although the term risk management is more prevalent today than ever before. One of the earliest mentions of risk management is from the 1920s, when businesses used the concept to more effectively manage insurance and business losses. Historically, risk management has been primarily handled by someone at the executive level, often used by chief financial officers to determine appropriate levels of insurance coverage, for example. However, today’s safety managers are finding that some of the risk management concepts can also be used at the production level to reduce the probability of accidental and business losses there as well.

Risk management is really just a specialized form of management. It incorporates the basic tenets of management, including the processes of planning, leading, organizing, and controlling personnel and processes in order to meet the objectives of an organization. Risk management also incorporates decisional aspects, which focuses on the following:

  • Identifying and analyzing potential loss exposures.
  • Brainstorming some potential solutions.
  • Selecting and implementing the chosen solution.
  • Following up to ensure that the solution is effective.

Look for potential loss exposures

Loss exposures are, very simply, anything that is exposed to a loss. Your car is an exposure. The building you work in is an exposure. Your employees are an exposure. In order to achieve the goal of reducing workplace risks, you must establish a plan for eliminating employee injuries and illnesses by making the plan a part of daily operations. The plan should not only consider the organization’s immediate needs, but should provide for ongoing and long lasting employee protection. And, once the plan is designed, it must be properly implemented. As a result, the system will enable you to anticipate, identify, and eliminate the conditions or procedures that could result in workplace injuries and illnesses.

Developing a safety and health system begins with an evaluation of the workplace that consists of two primary steps. The first step is to perform a comprehensive survey or audit, and the second step is to perform an assessment of existing safety and health systems currently in place.

An initial survey or audit includes such factors as:

  • An evaluation of workplace conditions with respect to mandatory requirements and regulations, as well as safety and health procedures that are generally accepted by industry.
  • An examination of what, how, and where dangerous materials are used.
  • Direct observations of employee work habits and practices, or standard work procedures.
  • Discussions with employees and supervisors concerning any safety and health problems that they have experienced.

Methods to identify potential loss exposures:

  • Examining previous loss histories.
  • Distributing surveys and questionnaires to employees.
  • Performing personal facility inspections and audits.
  • Reviewing flowcharts of your organization’s operations.
  • Seeking outside advice from risk management and loss control experts.

     Look for Part II Next Month, Outlining Areas of Focus 2-4.

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