Identification is the most important step in the Process of Risk Management. You can’t manage what hasn’t been identified.
But, once you have identified exposures to financial loss, and before any insurance decisions are made, you must analyze the exposures; qualitatively and quantitatively.
Don’t treat insurance as a substitute for Risk Control
Risk Control – Action to minimize, at the optimal cost, losses that strike the organization. “any conscious action or inaction to reduce the probability, frequency, severity, or unpredictability of loss.” Risk control is a PEOPLE PROCESS
Pre-Loss techniques of risk control
- Reduction (both pre-loss and post loss)
- Segregation (separation or duplication)
- Transfer (either contractual or physical or both)
- Claims management,
- litigation management, and
- disaster planning