Risk is the product of the probability of a potential loss occurring and its corresponding severity or consequence. Insurance is a tool that is commonly used to manage risk. However, simply buying insurance to address all known elements of risk is not prudent. Buying unnecessary insurance is wasteful. Conversely, uninsured key assets and severe exposures to loss can bring about financial ruin. A well thought out insurance program provides the balance between these two conditions.
Five major phases are involved:
- Identify exposures to loss, damage and expense
- Analyze data to determine frequency and severity of potential losses
- Reduce or eliminate risk
- Develop strategy to finance losses when they occur
- Implement and manage the plan, and monitor its results
First we identify the possible loss scenarios you face. Loss can come from property damage, legal actions, reduced income or increased expense. We gather the information to identify potential causes of loss and to evaluate their corresponding impact on you.
The next step involves analyzing the data gathered during Phase One. We will determine your unique tolerance for risk; especially as it applies to how much risk you are willing to accept.
Reducing or eliminating risk is our next focus. The obvious benefits include avoiding loss or injury and controlling insurance costs.
Phase Four determines how losses that do occur will be financed. This will ensure that there is no major impact on your overall financial plan. Solutions may include treating losses as a current expense or purchasing insurance.
Phase Five is program administration. During this phase we put the plan into operation and monitor its performance and accuracy as your needs change.