what is risk management
Risk management is the process of assessing risks and taking steps to either eliminate or to reduce them (as far as is reasonably practicable) by introducing control measures.
Health and safety legislation states that risk ‘expresses the likelihood that harm from a particular hazard is realised’, and that a hazard is ‘something with the potential to cause harm.’
Risk
You can look at risks as ‘accidents waiting to happen.’ A hazard such as an unguarded machine or a slippery path will remain just a hazard so long as no one goes near them. It is only when people are introduced into the equation - and there is the possibility of someone being injured - that hazards become risks.
As insurers, however, we use the expression ‘risk’ far more widely than merely to refer to hazards. We have traditionally used the word risk generically to describe the businesses presented to us for insurance.
Managing risk, therefore, covers all those areas which can lead to losses be it from: accidents to persons; loss or damage to property by fire, storm, theft or other perils; or financial loss to the business itself as a result of business interruption.
Ecclesiastical's view on risk management
One of the most important areas to consider when underwriting a risk is how the business is run, as well as the specific industry it’s in. We feel this provides a good guide to the real level of risk involved.
In simple terms, a risk is underwritten on its merits, not as part of an overall portfolio. So businesses with a proactive or superior approach to risk management are well received.
Please note: These notes are aimed at increasing awareness of the relevant laws and increasing understanding of the potential for triggering insurance claims. It is, however, only a very brief overview and is based on our understanding of current law and practice (March 2008). Legal advice must be obtained if you're unsure of any of your responsibilities.
