Risk management and insurance are related concepts, and they often go hand in hand. The protection these services provide for businesses and organizations is vital to mitigate the negative effects of worst-case events. But that isn’t the whole story. Because, while yes, buying an insurance policy helps to protect your business, it’s only one part of the equation. True protection comes from incorporating proactive risk management strategies. Here we’ll get into the differences between the two and how Althans Insurance Agency is ready to help.
Risk Management vs. Insurance
Firstly, let’s define terms. Risk management involves measured and planned steps taken to identify, assess, and then prevent threats that could impact your business for the worst. The aim is to anticipate and avoid risks before they ever materialize. Risk management services like loss control, claims advocacy, and safety program development help achieve this end, allowing businesses to minimize the likelihood and impact of loss. This is a proactive approach in which risks are categorized and determined to be those that can be avoided, reduced, accepted, or transferred. The end goal is always to minimize potential losses and prevent disruptions with a focus on protecting assets and preserving stability.
While risk management is more of a broad, umbrella term, insurance, on the other hand, is a tool in the risk management arsenal. For those risks that cannot be avoided or prevented somehow–e.g., accidents, property damage, legal liabilities–insurance steps in to transfer these covered risks to the insurer. In exchange for the protection afforded by this financial and legal safety net, the policyholder pays a yearly premium. Insurance providers can help policyholders minimize risk exposure through regular check-ins and risk assessments. They can also aid in proactive planning by helping businesses to identify and then actively work to prevent potential risks from being realized. However, if worst comes to worst, and risks become realities, insurance is there to ensure business continuity following an adverse event.
Key Insurance Considerations For Businesses
Every business faces unique risks, it’s true. But it’s also true that all businesses face some of the same, wide-reaching risks. These are some of the top insurance policies to consider when working to actively protect your investment:
- General Liability Insurance: From customer injuries to property damage and legal concerns, general liability insurance protects you and your business from work-related liabilities
- Workers' Compensation Insurance: Often a required coverage, workers’ compensation insurance protects employees who sustain injuries on the job
- Commercial Auto Insurance: A must-have for businesses using any vehicle for commercial purposes
- Commercial Property Insurance: From buildings, equipment, or stocked inventory to vandalism or natural disasters and fire, commercial property insurance protects the physical assets of a business
With these protective policies in place, you can rest assured that if the worst thing you can imagine comes to pass, your insurance safety net will be there to catch you. That said, insurance with no risk management leaves you exposed to avoidable risks that may not be covered by your policy. But when used together, these protections combine to form a powerful force to ward off risks that could otherwise hold you back, allowing you to navigate uncertainty as your business grows and safeguarding your financial well-being along the way.
Risk Management Over Insurance
At Althans Insurance Agency, we believe in prevention before compensation. Risk management services like loss control, claims advocacy, and safety program development help businesses to minimize the likelihood and impact of loss. For example, a manufacturer with proper employee safety training and routine equipment inspections is less likely to face costly workplace accidents. A retailer who monitors for cyber threats is better prepared to prevent a data breach.
These prevention efforts go far to prove that you are a responsible business owner who is working hard and doing your part to mitigate risk. Should you then experience a covered loss or negative event, despite all of your planning, it’s clear to your insurer that you did your part, and you can be certain of their aid. We’ll always advise and advocate for a proactive approach, but rest assured that when you need your insurance to pick up the slack, it will be there.
At Althans Insurance Agency, our risk specialists partner with you to identify vulnerabilities and then help you to create a plan to address them. From safety audits to compliance reviews, we go beyond the insurance policy to help you protect your people, your assets, and your bottom line. If that sounds like an approach you’d appreciate, please contact us to learn more.