Enterprise Risk Management

What is it and how does it affect me?

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By Brian Lanari

Q. What Is Enterprise Risk Management (ERM)?

A business risk involves the probability of a loss intrinsic in a company's operations and environment. 

Enterprise risk management includes methods and procedures that companies use to manage and seize opportunities related to the achievement of their goals.

Q. What Are Some Of The Common Risks That Businesses Face?

  • Higher worker's compensation insurance premiums due to employee injuries and/or illnesses
  • Lower productivity and lost business income due to the absence of injured and/or ill employees
  • Not having enough cash flow to weather emergencies or last minute must haves
  • High interest rates on loans
  • The potential for catastrophic loss when depending too heavily on one single large account (client).

Q. What Is Involved With Managing These Risks?

Employee risk management involves indoctrinating and training employees in workplace safety. This can include:

  • Regularly scheduled mandatory training to prevent accidents and illnesses
  • Maintaining a system for clear communication regarding hazards
  • Teaching equipment safety and requiring regular and proper equipment maintenance

Financial risk management involves being completely aware of, and nurturing, your company's financial condition. This can include:

  • Identifying the daily financial transactions your business already makes and maximize what's working
  • Having several smaller accounts in addition to any large accounts you might have - large accounts are great but having several smaller accounts in addition to those larger accounts can help your company more easily weather economic downturns
  • Keeping loans to a minimum - most interest rates are astronomical and can seriously cripple a business

Continually! Regular reviews of the strategies you follow will allow you to make adjustments before a problem can seriously impact your business and bottom line.

Q. How Often Should You Review Your Risk Management Strategies And How Does This Help Your Bottom Line?

Compliance
Issues!

Please note that there are also compliance issues with regards to employees; some states have thousands of them. Make sure you stay on top of 'em.

Continually! Regular reviews of the strategies you follow will allow you to make adjustments before a problem can seriously impact your business and bottom line.

Pay attention to your workers and their environment and keep in mind that employees who feel cared for will be safer and more productive. Workplace safety equals lower costs. 

Reducing employee risks can have the following effects on your bottom line:

  • Lower worker's compensation insurance premiums
  • Less time lost due to ill and/or injured employees - productivity increases your income
  • A larger pool of potential employees to choose from - employees want to work at companies that have high safety reputations and this will give you the chance to hire the "cream of the crop"

Reducing financial risks can have the following effects on your bottom line:

  • The ability to hire more employees in order to have more projects going at once increases your income
  • A much stronger ability to weather the ups and downs of the economy
  • Once again, a larger pool of potential employees to choose from - not only do employees want to work at safe companies, they also want to work at companies that aren't going to go out of business and leave them without a job - again giving you the opportunity to hire the "cream of the crop"

Putting It All Together

Mitigating the risks outlined above clearly equals strengthening your bottom line. Assess which procedures are working and which aren't; repeat those that are working and dump those that are not.
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About the Author: Brian Lanari has more than 25 years of experience in Enterprise Risk Management. He specializes in HR benefits, PPACA (Obamacare) compliance, etc. He has had thousands of clients and employees through the years. By managing risks, his goal is to ensure the longevity of his clients and help maximize their profits. Please feel free to visit Brian at his LinkedIn profile: http://informedcontractors.com/brian-lanari

Manage Your Risk!

Employee safety, and the health of your company, is a major problem if you don't manage the various risks.

A couple items to help with employee safety:

Many safety products for the jobsite

Customizable employee handbooks

Workplace safety guides

To help with project management:

Project Management Templates

Fraudulent Lien Waiver/Release Forms

To help with paperwork management:

LienLawOnline

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