Risk is an inherent part of all business — but it can be greater for certain professions, like remodelers. You must manage risk and mitigate bad situations. Use these 5 quick steps to start building your risk management plan.
1. Identify business risks.
There are several types of business risks (preventable, strategic, external, etc.). Once you become familiar with the various types, especially within your specific industry, you’re in better shape to plan for them.
2. Determine your company’s vulnerability for each risk.
Ask yourself: what are the odds that this particular risk will happen to my business? And how much does the company stand to lose as a result?
3. Incorporate these components into the plan.
- Practice active prevention
- Design work areas to reduce the chance of an accident
- Educate employees on safe work practices and use of equipment
- Check and service equipment on a regular basis
- Monitor operational processes
- Guide behaviors
4. Acquire the right types of insurance.
Insurance is a central part of risk management. Key types of insurance are:
- Contractor’s Liability Insurance
- General Business Liability Insurance
- Workers Compensation Insurance
- State Disability Insurance
Contact your licensed insurance agent and/or attorney for advice on the type and amount of coverage that you should carry.
5. Monitor and adapt as needed.
- Risk management plans should be reviewed and updated on regular basis
- Review meetings should include the owners, department heads and (if warranted) a risk management consultant
Business Tip: Many times, insurance companies will provide hands-on advice on mitigating new risks as they come along, with the goal of reducing payouts on claims.
Risk Management Watch-outs
Multiple studies have found that people overestimate their ability to influence events that, in fact, are heavily determined by chance. We tend to be overconfident about risk assessments and shortsighted in our assessment of the range of outcomes that could occur.
We often compound this problem with a confirmation bias, which drives us to favor information that supports our positions (typically successes) and suppress information that contradicts them (typically failures).
Risk management focuses on the negative rather than opportunities. It runs counter to the “can do” mentality of many contractors.
So don’t go too overboard on risk management. Often, it isn’t solved by establishing a long list of rules, but through appropriate job training, conversations, common sense, or just looking at a situation to determine the right thing to do.
The Most Overlooked Risk in Remodeling
One daily risk that remodelers typically overlook is jobsite dust. It’s more dangerous than you think. Failing to manage jobsite dust poses health issues for BOTH your team and your clients. Not only that, but it also damages belongings & equipment, and can destroy your reputation.
You can eliminate this problem by making sure your company follows These Best Practices on how to contain jobsite dust.
So, grab a piece of paper, take a moment and begin the process by identifying your business risks right now!