What is Risk and Risk Management?
For corporations, a risk is the possibility of a loss or other adverse event that has the potential to interfere with the organization’s operational, reputational and financial ability and for which an insurance claim may be made. A risk management plan includes strategies and techniques for recognizing and managing risks.
For individuals and corporations, risk management doesn’t have to be expensive or time consuming. It can be as simple as addressing these 3 questions:
- What can go wrong?
- What will you do to prevent the harm or loss from occurring and how will you respond to it if it does occur?
- If a harm or loss occurs, how will you pay for it?
Risk Management and Auto Insurance
As a car driver and/or owner you face risk as well as the opportunity to practise effective risk management.
Examples of risk include:
- If you don’t have auto insurance and are involved in a collision, you may be sued and have to pay the damages from your own resources.
- If you lend your car to a friend and he or she is found to be at fault for causing a collision, it will affect your car’s future insurance premium
Why Manage Risk?
With a clear understanding and approach to identifying your risks as a driver and/or car owner, you can prioritize and take actions to reduce your personal liability. For organizations, risk management can help save resources, protect corporate reputation, reduce legal liability and clearly define insurance needs.
Effective risk management does not eliminate risks. However, personal and operational risk-management practice shows an insurer that you are committed to preventing or managing losses. It makes you or your organization a better insurance risk.