Main Idea
If you woke up this morning, looked at your to do list and the only thing that you had to get done today was to evaluate your risk management, would you go back to sleep?
Expansion of Idea
The only things less appealing to most of us than risk management are probably doing your tax return or getting a root canal without anesthesia. Most of us would not know where to start in evaluating risk even if we knew that we needed to do so.
First, I want to define what I mean by risk management. When I use the term, I mean the process of evaluating your activities, looking at what could go wrong and setting up systems or policies to take care of the potential problems. Most people just think that they need insurance to handle risk. That is obviously part of the solution. Another part is having the right legal structure. But the biggest part is looking at your business and seeing what you could fix or improve. When you have systems that keep breaking down, then that is hurting your business. When your computer hard drive crashes, your business will be hurt. We need to be prepared for the big disasters, such as an earthquake or fire.
We also need to be prepared for the controllable disasters that happen when a customer is hurt by your product or service. And I think that when my client is hurt by our products or services, it is in a lot of ways more of a disaster than if my business is burned to the ground. I have backups of data and insurance policies for the fire. But I may not be able to fix the loss of goodwill if we hurt a customer. Yes, I can reimburse them for the financial loss because I have insurance. But goodwill probably will not be restored. And that can put me out of business.
Here are some things to think about:
Is there anything in my business that needs to be fixed and will add value to my customers?
What can go wrong with my business that may be out of my control? Are there systems that can be put in place to minimize the damage to the business and to our customers? Is this something that can actually add value to the relationship?
When was the last time I met with my insurance agent and attorney?