Commercial Liability Loss Exposure & Risk Control

Part 4D: Using Commercial Liability Risk/ Loss Control

Risk Management Process

Step 1: Identify Loss Exposures

Step 2: Analyze Loss Exposures

Step 3: Examine Feasibility of RM Techniques

Step 4: Select APproriate Mix of RM

Step 5: Implement Selected Techniques

Step 6: Montior Results and Revise RM Program

Select the Risk Techniques

5 Main Options in 2 Categories:

• Risk Control (aka Loss Control)

  • Avoidance

  • Loss Prevention

  • Loss Reduction

• Risk Financing (aka Loss Financing)

  • Retention

  • Transfer (Insurance and Non-Insurance)

Major Reaons for Risk Control

• Paying for liability losses is expensive – in both payment of damages and defense costs

• Lawsuits and/or Fines/Penalties from Regulatory Agencies can damage a company’s reputation and lead to loss of business.

• Its just better not to injure / kill people or damage their property.

Risk/ Loss Control

Can reduce:

• Operational Costs

• Reputational Risks

Risk Control

A Good Foundation:

• Management Buy-In

• Most Losses result from Human Behavior so employees must be trained properly and rewarded appropriately

Large Construction Company

Anytime more than 3 employees gather, the most senior employe must randomly select another employee to speak for 1 minute on a safety topic.

Risk Control Considerations Pre-Accident Techniques:

• Loss Prevention

• Loss Reduction

• Avoidance

• Cost Benefit Analysis

• Legal Requirements

• Insurance Requirements

• Public Perception

• Risk-Tolerance of Company

Risk Control Considerations Post-Accident Techniques:

• Claims Management

  • •Expediting Legitimate Claims

  • •Fighting Fraud

At a minimum, to Control Liability Losses:

• Respect rights of others

• Respect laws, statutes & ordinances

• Always question: “What grounds would a plaintiff’s attorney assert?”

Loss Control

• The remainder of this chapter provides specific examples for Loss Control Measures for each type of Liability Exposure.

• This is critically important. The reading is pretty straight-forward and you will get LOTS OF PRACTICE AS YOU CONSIDER EACH OF THESE FOR YOUR PROJECTS.