Risk Assessment: Preparing for the Monsters You Know
Risk assessment is all about preparing for the threats that you know, the ones you have the information on to make those life-saving and financially responsible decisions that will ultimately and probably benefit you or your business in the long run. It’s really the short term—the new stuff—that pops up that we have trouble responding to and, ironically, these are the things we have the greatest reaction to, even when they are not always the greatest threat to our well being.
If you have picked up a smartphone, turned on a TV or read a newspaper, you know the name “coronavirus.” COVID-19 has taken the lives of 11 people within the U.S. to date, compared to the 16,000-41,000 flu deaths, as reported by the CDC. Coronavirus’ effects seem like a drop in the ocean compared to the flu, but its effect on global supply chains, economic systems and markets has been far more substantial than an obviously larger threat to the population’s safety. Why is that?
COVID-19 is new. Influenza is not. The panic associated with this novel strain of coronavirus is because of its newness. We know how to combat the flu. You wash your hands. You don’t cough on people. You avoid work and school and all other places where you might come into contact with a bunch of folks. We have been taught how to reduce risk. It is simply part of our everyday life. There’s a flu season. That’s how common it is.
Coronavirus is the unknown. It is the boogie man. The monster under the bed. The creak in the floor in the middle of the night. We’re not sure what it’s capable of, so we are not exactly sure how to prepare for it to come knocking on our proverbial door. Chances are, you probably won’t be affected by this new disease, but you definitely will be touched by the flu—if you aren’t already infected. Just kidding; but you might want to keep your distance, just to be safe.
Risk assessment is all about there never being a true guarantee on absolute safety or absolute success. We invest time, energy and resources, people, places and things hoping for a return on those investments, but the world is full of plenty of factors beyond our control and literally anything at any time could go wrong. It might not, but it could. Risk assessment involves taking steps to minimize the likelihood of those things going wrong, or loss control. Purchasing insurance is a substantial step towards reducing the impact associated with these unforeseen events.
A company that doesn’t address loss control, that doesn’t take steps to mitigate the known dangers is likely to have a higher number of insurance claims. That history will make it more and more difficult for the same company to find insurance that covers their needs. On the flip side, a business that actively manages risks and controls losses as efficiently as possible will likely see lower insurance premiums as a result.
Essentially, if something is new there isn’t data to build a solid defense against it. There is no way to defend against something you didn’t even know existed yesterday. The only thing we can do is coexist with the threats we know. You insure your house because—heaven forbid—there might be a fire or a flood. You insure your vehicle because of every driver on the road, including you and your own possible human error. You cover your mouth and stay home if you’re not feeling well because it is a loss control technique disguised as a common courtesy.
We are responsible for what we know and insurance is part of that responsibility. It is vital to weathering what comes at us unexpectedly. It protects the ones we care about and those around us we rely upon to keep the lights on, so to speak. The insurance industry is literally a bridge over troubled waters where there wasn’t even a creek yesterday. Do yourself and everyone a favor; put on that life-jacket, even if it doesn’t look like rain.
The James Allen Companies focuses on bringing the most innovative and informed leaders to pivotal roles within the insurance industry. These talented professionals bring greater, more comprehensive service so your customers can get the highest degree of protection and preparedness in the face of the unforeseen.