In a Business Week interview, Vinay Mistry of AON stated that the company’s management team covers more than 370 risks, from nanotechnology through climate change.
They have designed and implemented realistic disaster scenarios for the top 20 exposures, from hurricanes to plane crashes and earthquakes. For a broader primer on organizing those scenarios, see Risk Management Overview.
The emerging risk areas discussed included synthetic biology, digital risk and cybercrime, “space risk,” which is based on the impact the solar cycle has on satellites, as well as the impact of climate change.
What can we learn from this? First, identify the dozens of risk exposures that apply to your company. Work with your insurance broker and legal counsel to make sure you do this the right way; if you need practical guidance on identifying exposures, see The Importance of Risk Management in Business.
Then focus on the most likely scenarios and have a plan for preventing and dealing with each of them. The risk exposures your company faces are both insurable and non-insurable and include, but are not limited to:
Common exposures
- IT systems and their ability to handle hurricanes, power outages, hacking attempts, etc.
- Employment Practice Liability exposures
- Errors and omissions exposures
- Health and safety exposures
- Work Comp exposures
- Product Liability
- Environmental liabilities
- Rapid loss of clientele
- Poor vendor or supplier relations
- Economic pressures, including diminished markets
- Exposure to competition, including offshore activity
- Financial exposures lacking proper checks and balances
- Lack of available capital
- Cyber-liability and social media exposures
- Turnover and morale problems
This is, of course, a short list that applies to most companies. If you’re an HR That Works member, take comfort in knowing that we can help you with your HR risks — or you can talk to your agent about coverage and next steps.
Frequently Asked Questions
How do I prioritize which risks to address first?
Start by assessing likelihood and potential financial or operational impact, then address high-likelihood/high-impact risks with written plans and controls.
Which of these exposures are usually insurable?
Many risks such as property damage, product liability, and cyber-liability can be insured, while others like reputational damage or strategic risk may be only partially insurable.
When should I involve legal counsel in risk planning?
Consult legal counsel before finalizing policies that affect liabilities, contracts, employment practices, or regulatory compliance to ensure adequate protection.