Safety through risk management

Knowing what you’re insuring and why is just the start

By Dustin Halvorson

Safety is always on our minds. We are making decisions throughout our days to be safe and to protect our family members, friends, and colleagues. Making sound decisions that allow the best path forward while eliminating as much risk as possible is built into our DNA.

Safety culture within an organization often falls—frequently by default—on leaders in operations, perhaps a designated safety manager, but how safe the company is and what standard the company holds comes from the top. The decision makers who set the tone on how employees are kept safe on the job are also the people who make the decisions to focus on safety across the company. This can mean safer hiring practices, proper employee reviews, safe relationships with lenders and interest holders, and attention to the details of how the company is protected in the event of a loss. Or it can mean the opposite.

Resilience of the company to withstand an unexpected loss, labour dispute, injury, or even a cyber event comes into question. Manufacturing companies have, in general, a great track record of being safe, and so much focus goes into this. Does the same attention going into proactively planning if a negative situation were to occur? Do the leaders think about contingency plans, or how insurance would and would not cover a claim? 

The way businesses operate is changing weekly if not daily, especially in the current climate of tariffs, pandemic ‘hangover,’ supply chain challenges, rising equipment costs, interest rate fluctuations, and growing litigious tendencies. How we think of being “safe” needs to evolve, and it takes attention and planning. Planning for growth and opportunities is great, but what about the risk dynamic of growth – is that balanced in the short- and long-term strategy your company is following? 

Do your fellow leaders know the short-term strengths and weaknesses of the company? Do they know how to leverage your competitive advantage? Do they know the vision for the next 12-18 months and what success looks like? Is this regularly checked? The same goes for the three-to-five-year window. 

Are leaders assigning team members into staying current on the evolving trends within the industry? Do they have time to meet with specialists to learn new best practices to support the company’s goals and address weaknesses? Who is up to date on best hiring and firing practices? Who oversees knowing the best cyber and IT strategies and education for employees around fraudulent emails, requests, and the risks associated? Who is taking the time to track inventory, equipment, and building values so that your insurance policies are correct in the event of a loss? Do leaders know how their business interruption insurance would respond in the event of a catastrophic loss? Can the company pay its bills, staff, and interest holders while it rebuilds? How long would it take to rebuild and regain market share if you had to start from scratch?

Another part of this exercise is to ask which losses you could “self-insure.” In other words, what losses could you withstand on your own? Have you set parameters and reserves aside for a rainy day? Have these been communicated to fellow leaders of the group. 

Being safe as an organization takes planning. It takes direction, advice, and communication to the team, so you are prepared BEFORE something goes wrong. Often, we make assumptions, which can be very costly when assumed unknowingly or incorrectly. 

The good news is that there are professionals that specialize in your company’s needs—accounting, banking, human resources, legal, risk management, and insurance. Have you taken the time to engage with these professionals to help plan and integrate strategy to safely support your growth, address challenges, and make the most of the opportunities around you?

As fast as your business is changing and the challenges continue to mount, now is the time to dig in and ask if what you did to get to here is what you need to do to get to there. Do you have the right support? Are you empowering your team to make changes and find solutions? Do you feel confident in the direction and plan going ahead or are you relying on comfort of the past?

Taking the time to pause and work on the business rather than only in the business is part of the solution. Dedicating time to focus on the health of your company is time that will see a return on its investment. During this time, you can look to experts around you to guide and share thought leadership.

In my world of risk management, we are always looking for ways to optimize your risk profile and reduce the cost of risk, working from your profitability backwards. In initial conversations with business owners, we like to identify opportunities for growth, not just of revenue but growth of the company’s people, products, and services.

Proactively, we can use educated probability to predict what could go wrong and how wrong it could go. If a loss were to occur, is it actually insured and how would the policy react in its current form? Is there anything we can do to ensure the coverage you need is in place or is it an uninsurable business risk that needs to be made known, prior to a loss occurring?

Identifying opportunities with a risk advisor adds to the confidence that you can pursue opportunities knowing you have the backing to take reasonable risks and have taken steps to educate your team, clients, and interest holders about what they need to know to be as profitable in your endeavours as possible.

Taking smart risks, seeking and using advice from industry experts, and being open to ‘what if’ will give you confidence in strategizing for growth and will support the overall health and safety of your business. 

Dustin Halvorson is Partner and Managing Director of Commercial Lines at HK Henderson Insurance, Saskatchewan’s most innovative commercial brokerage.