How's everyone doing? This is the third installment of the ever more popular "Mike Talkin" and probably the best one yet. The topic today is a good one: why is risk management and insurance valuable? I know what you're thinking...didn't risk management cause the AIG meltdown? No, that was bad risk management or risk mismanagement as I like to say.
Risk management is the process of settling on a level of risk aversion/tolerance, then identifying and measuring the risks, and then by protecting oneself with insurance or other means. The simple answer is that risk management is valuable because it protects a company from large losses. A couple of ways that effective risk management can benefit a firm are by reducing the number of on-the-job accidents and most importantly, minimizing legal liability. By understanding your risks, a company can implement procedures such as safer working conditions as one example. Lawsuits can be devastating to small companies and having a good protocol in place can minimize the number of accidents. Furthermore, your employees will be more efficient if they feel they are in a safe workplace.
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