Risk management is a process by which business risks are
identified, analyzed, engineered, reduced, eliminated or transferred. Often,
insurance is the final transfer of risk.
Certain risks point to insurance solutions, for example
large liability limits for products or automobile exposures.
Other risks immediately point to engineering or operational
risk management. Think of insurance as replacing a monetary loss. If a building
burns to the ground, money replaces the loss as building funds or asset value.
Now, think of losses that money cannot replace. Money will not buy a second
Mona Lisa.
Failure to recover data from damaged computers, loss of
cryogenically stored materials, losing the irreplaceable, these risks require
management.
The cloud changes the data recovery problems of the past,
but it exposes data to misuse and mischief. Simply keep a second portable
record separate from the original. This duplication technique can be used for
inventory management too; split mission critical stock storage into two
locations.
Use redundant monitoring systems on refrigeration or other
climate controlled areas. Implement a self-contained back-up energy supply such
as a generator. If money cannot replace the materials stored, take avoidance and
reduction loss control measures.
Do you have a product which requires a high level of
expertise to operate properly?
Once the product leaves your care, poor operator training
can lead to injuries or property losses. Distinguishing between defective equipment
and operator error can be difficult, or it may become secondary to the
financial depths of the stakeholders' pockets.
If your product requires operational expertise, reconsider
selling it as a service whereby your own personnel complete the task. You may
save your company exposure to liability claims.
Risk management techniques work well with non-monetary issues
or when components are irreplaceable at any price. Think through your
operations and identify risks which cannot be solved with money. Risk manage
those.