Control Your Costs with Risk Management
Every facet of your organization impacts your cost of risk. Regardless of the type of California business you run, many find it difficult to quantify their true cost of risk because it includes both pure and speculative risk. The impact negative publicity would have on your revenue is much harder to calculate than insurance premiums or lost productivity due to equipment downtime. But both qualitative and quantitative analysis is important, your total cost of risk is synonymous with price-the price of your risk management program. Contact GDI Insurance Agency, Inc today at 1-888-991-2929 to put risk management to work for your business!
Definition of Risk Management
Risk management is the identification, assessment and prioritization of risks and the subsequent coordinated and economical application of resources to minimize, monitor and control the probability and impact of losses. Effective risk management activities create value and should be an integral part of the decision-making process.
How does risk management impact your bottom line?
- Opportunity for better pricing on insurance premiums
- Saves out of pocket costs like deductibles
- Ensures a safe and stable environment for employees, volunteers and customers
- Helps you understand and be prepared for risks before losses occur
GDI Insurance Agency, Inc. takes a total cost of risk approach by tailoring your risk management program to look to the end game-your price. To reach that goal, we help you:
- Analyze your exposures
- Implement control measures to those exposures
- Determine risk transfer or financing options
- Manage current and future exposures
Identification of Exposures
As part of our risk management interview process, we look to confirm that your risk management approach supports your overall business objectives. As a business owner, what keeps you up at night? If that concern occurred, how would your income or cash flow be affected if there were unforeseen depletion of capital or a shutdown in operations? Discussing the qualitative aspects of your business provides the important details needed to solidify your price.
Exposures are both qualitative and quantitative. Analyses into both offer the foundation for developing forward-thinking approaches to those exposures.
What is Your Viewpoint on Risk?
Is your company risk-averse? Is it in a financial position to take on more risk versus transferring that risk to another party or contractually to a carrier? To help determine your risk aversion, it helps to assess your company history. For example, if you are a start-up company, cash flow and funds are typically tight, so you are more likely to be adverse to risk to protect the financial viability of your start-up organization. Conversely, if your company has a 20-plus year history, there are also risks, such as becoming obsolete, stagnant or too conservative with your business plan.
Additionally, we consider your industry, market position and competition in positioning your risk management solution to the changing needs of your business.
Quantitative analysis supports the qualitative interview. We look at the hard numbers and prior losses to identify trends in your performance. We also analyze losses to identify the following:
- Average incurred costs per loss
- Total incurred trends
- Top loss drivers
- Locations with high frequency issues
- Fraud behaviors
- Reporting lag time
- Frequency versus severity ratios
- OSHA-recordable performance
The results of our in-depth analysis will reveal opportunities to approach the critical areas driving your total cost of risk. We will isolate the root causes of these problematic areas and look to implement control measures to mitigate this exposure.
Risk Transfer and Financing
Once we have identified exposures and created control measures, we can focus on the remaining exposures to transfer and/or finance. The most basic topics include:
- That amount of risk your business can afford to assume in-house
- Ways in which GDI Insurance Agency, Inc. can assist in contractually transferring that risk to a third party
- The portion of the exposures your organization wants to finance through an insurance policy
Addressing these topics offers a direction as to how to approach financing your risk. Consider current cash flow needs, and determine if account receivables are current. If there is a lag learn how long it is, and if there are there resources available to correct it.
Considerations involve self-insured retentions if you have a mature loss control program and the financial reserves to cover those shock losses that occur. Therefore, consider a combination of insurance and non-insurance strategies.
Manage Your Exposures
Roughly 25 percent of businesses that sustain a major catastrophe are no longer in business within a year’s time. If there is an interruption in your operations, are you prepared?
GDI Insurance Agency, Inc. has the resources for you to develop a comprehensive business continuity plan. This involves backing up your policies and procedures. Through , we offer 24/7 Web access to your critical risk management information, employee education resources and tools to drive down your cost of regulatory compliance; all are ID- and password-enabled for your protection.
Cost of Risk Resources
To develop the most appropriate risk management program for your organization, GDI Insurance Agency, Inc. approaches insurance through a variety of strategies, including:
- Identification processes (qualitative and quantitative)
- Loss analysis tools to uncover exposures
- Implementation of pre- or post-loss initiatives that address cost containment
- Business continuation planning and disaster recovery
- Risk financing options, retained losses or transferred
- Regulatory compliance issues
Learn About the GDI Client Philosophy!
If You Think This Sounds Too Good To Be True, Here Is What Just A Few Of Our Clients Have To Say about their Insurance:
"“…$385,000 less a year than we were paying
We looked hard at all our budget items, and insurance seemed to be a big fixed expense. GDI found us a policy for $385,000 less a year than we were paying”
-CA Home Builder
"…found me coverage for $140,000 less a year
When everyone else said that was the best they could do, I called GDI, and they found me coverage for $140,000 less a year than anyone else offered.”
-CA Cement Contractor
GDI Insurance Agency, Inc. Your Trusted Business Insurance Experts
We work with you to develop a strategic action plan, assist in the execution of the designed risk management program and are committed to the monitoring and support of these initiatives. If you are interested in reviewing your risk management strategies, contact us today at 209-634-2929 to speak with one of our insurance experts.