Risk can be found lurking in every business.

//July 23, 2018

Risk can be found lurking in every business.

//July 23, 2018

Each time a manager meets with a staff member in his or her office, risk is present.

Risk can be present when it rains too little and when it rains too much.

And as recently noted in PropertyCasualty360, a website of a national underwriter company, “Messages sent on your company’s network could be evidence of professional liability, harassment or discrimination.”

This is why every business – luncheonettes and factories, medical offices and distribution centers, corner hardware stores and big box stores – needs to create an effective risk management plan.

When creating this plan, it is important to recognize internal and external factors contain risk for your business.


When accounting for internal risks, corporate culture is a good place to start.

The New Yorker recently had this to say about Uber’s widely reported growing pains: “Startups are often shaped by the values of venture capital: speed, growth, rapid returns. These values inform business practices and company culture, and the same qualities that make a workplace exciting and engaging can also turn a company into a cautionary tale.”

Mark Zuckerberg, during his recent testimony on Capitol Hill, probably regretted Facebook’s since-retired mission statement, “Move fast and break things,” when confronted by members of Congress

Google’s corporate code of conduct, “Do no evil,” and its parent company Alphabet’s code of conduct, “Do the right thing,” are considerably more risk averse.


Resource allocation also can play an important role in a company’s risk management.

Safety training, wellness management programs and proactive equipment maintenance schedules can help to reduce a company’s exposure to risk.

A company’s leadership team also will exert an oversized effect on its approach to risk management.

The New Yorker described characterizations of Uber’s recently deposed chief executive Travis Kalanick as “aggressive, juvenile and brash.” These personal qualities undoubtedly contributed to Uber’s voracious appetite for risk.

How does your company’s leadership team affect its approach to risk management?


The economy, clients, strategic partners, weather and political events are included among the many external risk factors exerting an effect on your business.

This is not to say externalities can’t be managed. Building a deep bench of strategic partners can help your company manage risk during a supply chain breakdown.

A client list with plenty of guppies and no whales can help your company manage the risk of lost business.

On the other hand, choosing to build an assembly plant in a federally designated special flood area cannot be considered prudent risk management.


The four-step FACT approach – find, analyze, control and transfer – to risk management can help your company begin to build a risk management plan.

<Find and recognize the risks potentially threatening your business, employees, clients, directors, strategic partners and other stakeholders. As noted, there are internal and external risk factors weighing on the long-term viability of your business. Begin with those listed here and spend time recording the other risks potentially threatening your business.

<Analyze these risks to determine how to eliminate or mitigate them. Once you know where potential threats can be found, address the likelihood of their occurrence. Some risks will be minor and others potentially could lead to the demise of your business. All must be reviewed closely to deliver effective risk management.

<Control risk by executing a carefully constructed risk management plan. Successful risk management means having the right risk plan in place before risks metastasize to harm your business, and not after the fact.

<Transfer unacceptable risks to insurance coverage by contacting your trusted insurance broker. He or she should understand your needs and existing coverages and enjoy wide access to the insurance marketplace. Better yet, ask your broker to help develop your risk management plan. Such expertise will add a great deal to the process.

Based in Warrington, Kirk Salmon is a sales and relationship manager concentrating on the Lehigh Valley at KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm with three offices in southeastern Pennsylvania. He can be reached at [email protected].