Four Components of Effective Risk Management

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FOUR COMPONENTS OF EFFECTIVE 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 organization? Opportunity for better pricing on insurance premiums Saves out-of-pocket costs like deductibles Ensures a safe and stable environment for employees and volunteers Helps you understand and be prepared for risks before losses occur Strategies for addressing an identified risk typically include two of the following: Risk Avoidance Mitigation or Prevention Can you eliminate a service or activity What steps can be taken to reduce the considered too risky? likelihood of losses occurring or lessen Eliminate activities that involve risk the impact of losses should they occur? Avoid creating activities that involve risk Relatively extreme approach Manage liability by structuring activities and programs in ways that reduce or limit risk Risk Management Risk Transfer Risk Retention Can we transfer either the risk or Accept the risk as it is – some risk is financial consequences of a loss to inherent in the activities of operation. another party? Self-insurance Insurance policies Deductibles Indemnification agreements Releases and waivers The insurance professionals at Clarke & Sampson, Inc. have a variety of resources to help you build an effective risk management program. Clarke & Sampson, Inc. 228 S. Washington Street #200 Alexandria, VA 22314 Tel: (703) 683-6601 ◊ www.clarkeandsampson.com .

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