RISK MANAGEMENT RISK IS INEVITABLE From your research

RISK MANAGEMENT

RISK IS INEVITABLE From your research of local businesses, what Risk was unavoidable and why? Speculative Vs. Pure Risk Speculative = Taking a chance for profit or loss Pure = Threat of a loss to your business without any possibility of gain

PURE RISK - CRIME Small businesses 35% more likely to be victims of crime Shoplifting – Most common retail crime (13 BILLINON in losses per year) How Prevented? Training / Lighting / Mirrors and Cameras / Tags / Guards

PURE RISK - CRIME Employee Theft– 15 x more likely to steal than customers (20 BILLION in loss per year) How Prevented? Hire honest people – background checks & polygraphs / Information to Employees/ Locks / Watch Trash / Safeguard Keys Burglary – Breaking into a building to commit a felony How Prevented? Site Selection / Locks / Alarms / Guards / Lighting

PURE RISK - CRIME Robbery – Taking of property by force of threat Stolen Credit Cards Bad Checks Counterfeit Money Cyber Crime Hackers or Viruses Target / Home Depot / Us Postal

PURE RISK – OTHER TYPES Fires / Floods / Tornados / Earthquakes / Hurricanes Accidents and Injury Negligence – Failure to exercise reasonable care

RISK MANAGEMENT STRATEGIES Preventing or Reducing business loss 1. Identifies Risks 2. Estimating Potential Losses from Risks 3. Best Way to Address Risks Avoidance / Reduction / Transfer / Retention

RISK MANAGEMENT STRATEGIES Risk Avoidance Making decisions to try and reduce the risk exposure of your business Ex. Selecting a safe location Risk Reduction Business Floor plan Design / Training / Equipment Inspection and Repair / Product Safety Testing / Security

RISK MANAGEMENT STRATEGIES Risk Transfer Insurance! Premium – The amount paid for insurance Main 4 Types Property / Casualty / Life / Workers’ Compensation

RISK MANAGEMENT STRATEGIES Property - Fire or Flood Casualty - Liability for an Accident or Protection Against Theft Life - Protection Against the Death of an Owner Workers’ Compensations – Required by the Government – Pay for Medical and Income Benefits to Employees Injured on the Job or due to Job Related Illnesses

RISK MANAGEMENT STRATEGIES Risk Retention When a Business cannot obtain insurance or cannot afford the policies To offset the Risk, the owner may save money to cover the cost if the risk actually occurs