Need To Protect Your Business? Here's How Risk Engineering Can Help
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Are you worried about unseen risks that could drastically impair your business performance? By applying risk engineering (RE) techniques in assessing those unseen risks, you are better protected from disruption. And that resilience can help you focus on achieving your business goals.
Risk engineering makes it easier for you to obtain the right levels of insurance and avoid the higher premiums typical of a risk profile consisting of unknown or unquantified risks. So, let’s look at why risk engineering is a must if you want to keep your business safe.
Why do you need risk engineering?
In short, because organizations that stop problems arising in the first place gain a considerable edge over those that do not. After all, loss prevention represents a significant business advantage over the more complex and unpredictable alternative– loss restoration. So, through a variety of surveys, audits and assessments, RE equips businesses to prepare for the worst. Those services can be tailored to suit your unique risk profile and include everything from strategic risk consulting through to business continuity management, as well as fire risk control and property risk engineering. All of which deliver streamlined risk analytics. It’s a proactive approach that lets users visualize risk and monitor the positive effects of mitigation.
Assessing risk– how does RE help?
To put it simply, organizations can minimize the impact of unseen problems in their risk profile. It can provide early warning of potential threats to business, thus saving considerable resources. This means you can reduce exposure, with the ultimate aim of reducing the total cost of risk to your business and insurer.
Anticipating, not reacting
If your organization has major supply chain dependencies or a poor property damage or business interruption claims record, RE can help identify those issues, saving you time and money. In organizations with high site values or large loss potentials, RE allows you to minimize the overall cost of that risk by anticipating potential losses rather than reacting to them. But why is anticipation important? Because prevention is safer, cheaper and faster than loss restoration.
Lower risk equals reduced costs
As underwriters receive more in-depth information as to the nature and magnitude of risk, RE can assist you in better assessing and quantifying that risk. The same systematic process can therefore help organizations that are unable to obtain insurance because underwriters and insurers may have no appetite for the nature or magnitude of your existing risk.
Plan of action: Undertake in-depth risk assessments to make sure you’re adequately quantifying your risk. That way, you’ll avoid a high premium spend.
Where does RE fit into risk management?
Let’s take a step back and look at RE from a wider view. Essentially, RE is a process within an organization’s overall risk management strategy to identify, evaluate and improve risk. Of course, the main aim here is to minimize the total cost of risk. It gives underwriters the insight they need to evaluate and assess the technical quality and size of risk as part of the selection and pricing process. RE can also offer businesses valuable insights into their loss prevention and risk management strategies.
A good risk management company can help your business identify and assess the expected worst case estimated maximum loss (EML) scenarios for each of the main asset classes and insurance lines. These scenarios will be developed in compliance with insurance market norms and expectations, including liaison with underwriters and management of their surveys.
Plan of action: Implement RE techniques to evaluate the nature and magnitude of your exposure.
How you can benefit from risk engineering?
Let’s look at some concrete examples on how you can benefit from risk engineering.
Property Risk Engineering (PRE)
PRE evaluates an organization’s exposure to property damage, specifically looking at how these exposures impact a business’s assets. It assesses the short or long term interruption to the business as a result of loss or damage to the assets, operations and earning capacity. All this is achieved using a number of tools, including surveys and site inspections.
Undertaking a PRE review can be beneficial because it improves understanding for you and your insurer around key risk exposures and the adequacy of internal controls. In addition, through independent, expert and pragmatic advice, it can see a reduction in organizations’ incidents and claims, thereby sending premiums down.
Indeed, PRE can foster a more acute risk-aware culture within your organization that can, in turn, have demonstrable positive impacts on the placement and renewal of cover.
Fire Risk Control (FRC)
FRC reviews will assess levels of workforce competency in the form of permits and fire training, for example, as well as ensuring there is adequate provision of trained fire wardens. Your risk management team provides a comprehensive range of services including risk assessment, auditing, training and preparation of fire emergency plans. In addition, the team should offer comprehensive auditing and inspection of both life and asset protection in relation to fire.
By evaluating processes within your organization with regard to life safety systems and storage of materials, you can further your ultimate goals- preservation of life and property, business continuity, and claims avoidance.
Evaluating those processes gives underwriters and insurers a more in-depth understanding of your actual risk. That means fewer unknown or unquantified risks. And by assessing and improving your processes, procedures and prevention systems, it can help you avoid the high premiums associated with those unknown or unquantified risks.
Health and safety RE
More and more organizations are seeking a corporate focus to the management of regulatory and compliance risks such as health and safety. In addition, as organizations look to set industry standards for world-class performance in their sector, working with the right risk management company means you get assistance across a number of sectors, helping to achieve compliance with legal requirements.
Ultimately this means benefits and savings: Your business will suffer fewer work-related accidents and fewer incidents of ill health. This translates directly into lower costs. By ensuring that employees’ health, as well as that of any third parties, is adequately assessed and protected, your organisation can reduce the potential risk of public liability.
Why you should consider RE today
If concerns over unknown risks keeps you up at night, there’s a solution. By reducing your exposure to risk, you can reduce the cost of that risk. And your business operations, and profits, can remain robust and intact.
Related: Risk Something Or Risk Everything