risk management
Risk management is a process of assessing risks and taking steps to either eliminate them or to reduce them (as far as is reasonably practicable) by the introduction of control measures.
Risk
Health and safety legislation requires that all employers carry out a risk assessment of their business to identify all hazards (something with a potential to cause harm). A hazard can include substances or machines, methods of work and other aspects of work organisation.
As insurers, however, we use the expression ‘risk’ far more widely than merely to refer to hazards. We have traditionally used the word risk generically to describe the businesses presented to us for insurance.
Managing risk, therefore, covers all those areas that can lead to losses - be it from accidents to people, loss or damage to property by fire, storm, theft, or financial loss to the business itself as a result of business interruption.
You can look at risks as ‘accidents waiting to happen.’ A hazard such as an unguarded machine or a slippery path will remain just a hazard so long as no one goes near them. It is only when people are introduced into the equation, and there is the possibility of someone being injured, that hazards become risks.
In risk management terms, a hazard becomes a risk when it’s expressed as a likelihood of injury. Likelihood may range from ‘improbable’ to ‘certain’. Risks are also expressed in terms of their severity. This can range from no injury at all, through cuts and bruises, to major injuries or fatalities. Thus a ’major risk’ would be one that could potentially cause a severe injury and would have a high likelihood of occurring.
Ecclesiastical's view on risk management
One of the most important areas we look for when underwriting a risk is how the business is run, as well as the specific industry it’s in. We feel this demonstrates a more professional approach and provides a better guide to the real level of risk involved.
In simple terms, we underwrite a risk on its merits, not as part of an overall portfolio. We’re looking for businesses with a proactive or superior approach to risk management.
Please note: These notes are aimed at increasing awareness of the relevant laws and increasing understanding of the potential for triggering insurance claims. It is, however, only a very brief overview and is based on our understanding of current law and practice. Legal advice must be obtained if you're unsure of any of your responsibilities.
If you’re in any doubt on any issue relating to insurance, please contact your broker in the first instance.
