INTRODUCTION TO THE RISK REPORT
Recently while on a flight to St. Louis, I had the pleasure of sitting beside a pilot for American Airlines. I know what you may be thinking…what was Seth doing in the cockpit…but do not worry, he was actually sitting in coach headed to his next departure point. After a few minutes of “hello’s”, name exchange’s, and “where you headed”, he asked what I did for a living. Now, this is normally a question that for most is relatively easy to explain…for some it’s a lawyer or an accountant or maybe a restauranteur or a contractor, but for me, to explain what we do can be a bit more complex. “Well,” I responded, “the world is full of successful business men and women; people who pick a trade and find a way to build a business around it, and those people to turn to us to protect that business”.
Risk is something that every organization and employer faces. At GDP Advisors, we classify risk into two categories:
- Insurable risk; and
- Uninsurable risk.
Commonly known risks, like fire, flood, disaster, general liability and employee health conditions are easily identified and in most cases easily insurable; however, less identifiable risk like compliance risk, loss of a key client, culture risk and profit margin risk are less identifiable and, in almost all cases, uninsurable.
The insurance industry has, for years focused in areas of insurable risk and done a relatively good job of helping organizations and employers navigate that risk by transferring it through the purchase of insurance. But, of course they’d be good helping in those areas…they sell insurance. Unfortunately, there are few avenues to help employers with uninsurable risk…why? There’s no commission in doing that.
At GDP, our focus for every client is to impact Growth, Direction and Profitability by first identifying, then quantifying and finally prioritizing risks within in each of those organizations. It’s not a 12 step program, but the reality is to solve a problem, you must first identify that there is one. Identification is the first process in successfully managing risks within an organization, and once you have identified that risk, then you must quantify it. Risk without some idea of ‘value impact’ may not be properly managed as a priority so you must place a value on that risk, which leads us to the final step, prioritization. Once we identify and then quantify any risk, we can then prioritize our actions taken to either transfer, minimize, or eliminate that risk. In some cases risks don’t always go away, as a matter of fact, new risks facing companies are coming to the forefront each and every day, but when organizations take these three steps to identify, quantify and prioritize, reducing the impact of these risks can result in a significant growth, direction and profits to that company.
This article or ‘blog’ as the kids are calling it will serve as an informative and hopefully entertaining and insightful look into various existing and emerging risks that employers face. We hope that you enjoy and learn from the information we provide in future posts and welcome questions and feedback on the material provided in the hope that you find your organization has a clear Direction for Growth and Profitability.