When was the last time you sat down to think about the risks or threats your organization may face? Knowing the risks that your agency could likely face can help you mitigate or prevent them, helping to avoid insurance claims.
You can organize the risks your organization may face into one of three categories as either a preventable, external or strategic risk. These categories are broken down below.
- Preventable risks are internal risks that can be controlled in advance. These risks typically involve inappropriate decisions or behaviors. Avoiding or eliminating them is accomplished through a rule-based, policy and compliance approach. An inspection program or consistently applied human resource policies are prime examples of prevention techniques.
2. External risks are events from outside and a majority of the time these risks are beyond the organization’s control. Examples of external risks are events such as natural disasters. The organization’s focus should be on activities that can limit the impact. These activities can include a business continuity plan or disaster recovery plan.
3. Strategic risks are ones that an organization assumes voluntarily and manages so that the organization can potentially gain something in return. These require you to identify your core competencies to leverage them to protect against potential threats and take advantage of opportunities. These are often related to the business and how it operates. A good example may be starting up a management company using the organization’s knowledge of property management.
It is essential to know the differences among these three types of risk, how to contain them, and how to prevent them. HAI Group provides risk consulting services to our members to help in reducing these risks. To learn about the services HAI Group offers and connect with a consultant click here. To discover the five crucial steps in the risk management process, read our recent blog post here.