Oak Creek Insurance Agency

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IN: Why Risk Management Is Essential To Your Business

Dear Valued Customer,

In this issue of “—————-” we focus on why risk management is essential to your business, and what benefits can be gained by managing business risks – no matter how large or small.

Risk: What can go wrong? How can you at least minimize the risks? What will you do in the event of an incident? If something happens, how will you pay for it? Read on for a definition of risk management, how you can assess where your business is threatened, how smart hiring practices can help avoid employment-related claims, see if you need professional liability insurance, understand the ten things you can do to practice cyber security, and much more.

We appreciate your continued business and look forward to serving you.

Kind regards,

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What Is Risk Management?

Insurance_ErasingRiskThe business environment is constantly changing every day — unpredictable, volatile, and more complex, so effective risk management is increasingly important to the success of any business.

Risk is any uncertainty about a future event that threatens your organization’s ability to reach its objectives. Risk management is a discipline for dealing with the potential risk. It provides strategies, techniques, and an approach to recognizing and confronting any threat your business faces.

While business has historically viewed risk as a necessary evil that should be minimized or mitigated whenever possible, increased regulatory requirements have forced businesses to expend significant resources to address risk, and management has begun to scrutinize whether the right controls are in place.

Risk management may be as uncomplicated as asking and answering three basic questions:

  1. What can go wrong?
  2. What will we do (both to prevent the harm from occurring and in the aftermath of an “incident”)?
  3. If something happens, how will we pay for it?

 

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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How Do I Assess Where My Business Is Threatened?

People_ManVisualizingWithHandsThere are numerous areas of concern; the following examples are for illustrative purposes only:

Compliance: The risk factors relative to the organization’s compliance obligations, considering laws and regulations, policies and procedures, ethics and business conduct standards, and contracts, as well as strategic voluntary standards and best practices to which the organization has committed.

Credit: Risk of the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms.

Customers: The risk related to the customers that could potentially impact the organization’s reputation and financial position.

Financial: Risks related to a material misstatement of the organization’s financial statements by individuals internally or externally.

Goodwill: Risk regarding reputation, stature to your customers, prospects and the community at large, and the ability to raise money or be an attractive investment vehicle.

Information Technology: Risk associated with the potential for technology system failures and the organization’s return on information technology investments, including processing capacity, access control, data protection, and cyber crime.

Market: The market movements that could affect the organization’s performance or risk exposure, considering interest rate risk, currency risk, option risk, and commodity risk.

Operational: The risk of loss (including risks to financial performance and condition) resulting from inadequate or failed internal processes, people, and systems, or from external events.

Products & Services: Risks associated with the potential recall of products or services due to operational concerns or situations typically production related, or errors and omissions typically related to service situations.

Property: Physical risks related to buildings, facilities, equipment and materials, and risks related to intellectual property like copyrights, and trademarks.

Supply chain: Risks associated with the inputs and logistics needed to support the creation of products and services, including selection and management of suppliers.

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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Do I Need Professional Liability Insurance?

Health-Wellness_HandsomeDoctorProfessionals that operate their own businesses need professional liability insurance in addition to an in-home business or businessowners policy. This protects them against financial losses from lawsuits filed against them by their clients.

Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. When liability is limited to acts of negligence, professional liability insurance may be called “errors and omissions” liability.

Professional liability insurance is a specialty coverage. Professional liability coverage is not provided under homeowners endorsements, in-home business policies or businessowners policies (BOPs).

Source: Insurance Information Institute, “Do I need professional liability insurance?” iii.org website. Accessed November 30, 2015. http://www.iii.org/individuals/business/optional/professionalliability/

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.