Many NY small business owners think that NY business insurance is the only way to manage their risks to loss. This is a misconception that independent insurance agents need to do a better job of correcting. The truth is that NY business insurance is just one of four risk management techniques, and there are other techniques that must be considered.
Wikipedia defines risk management as, “ the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.” What does this mean? Let’s break it down.
NY business insurance is just one of four risk management techniques that a business owner should use.
We have previously discussed the importance of risk management for business owners. We posed some questions that a business owner should ask him or herself in order to identify what risks exist. Once risks have been identified, there are four techniques that can be used to manage that risk:
Risk Avoidance: A business practicing risk avoidance would not expose itself to specific exposure. For example, a business would not keep customers’ credit card information on file so that it would not be held liable for credit card information being stolen.
Risk Reduction: If a business wanted to reduce its exposure to a fire, for example, it would install a sprinkler system and central fire alarm system. If a fire was to start, the impact of that fire would be significantly reduced by these things.
Risk Transfer: This is what insurance is considered. A standard business owners policy (BOP) transfers the risk of paying for a liability claim from the insured to the insurance company. If wind damages a roof, the risk is transferred from the building owner to the insurance company.
Risk Retention: This involves accepting the potential of loss. It could mean that a company chooses to not buy an insurance policy because it does not want to pay the premium associated with policy. It could also mean taking large deductibles of $5,000 or more on your insurance policy.
At The Murray Group, we pride ourselves on helping all of our clients (whether personal or business owners) identify their risks and use these four risk management techniques. In fact, we have designed a trademarked process called LiveSECURE 365 that specifically addresses this methodology.
NY business insurance is just one part of what we do.
If your current agent is not helping you with a total risk management program, we would like to talk further with you. Please call (518) 456-6688 and ask for me or any member of our highly-experienced team.