RISK MANAGEMENT PROCESS
The objective of risk management is to choose efficiently among methods to handle risk so as to avoid catastrophic losses. Risk management includes insurance management, but it should be used to measure both insurable and non-insurable risks.
The process of risk management has six distinct steps:
STEP 1- Identify risk management goals and objectives
STEP 2- Gather pertinent data to determine the risk exposure
STEP 3- Analyze and Evaluate the client's status
STEP 4- Develop and Present risk management recommendations
STEP 5- Implementation
STEP 6- Ongoing Monitoring
Which of the following is not one of the steps in the risk management evaluation process?
A. Recommend appropriate insurance products to cover risk exposures
B. Meet with the client and re-evaluate their situation on an ongoing basis
C. Obtain copies of the client's current insurance declaration pages
D. Select only the highest deductibles to keep premium payments affordable
While considering various deductible amounts to keep premium payments affordable is important, policies should not only be selected with high deductibles. The deductibles need to be at sustainable and reasonable levels or the insured can be faced with insufficient liquidity. Answers A, B, and C are all steps in the risk management process.
When presenting risk management recommendations, essential coverage should be purchased first such as life, disability, health, auto, and homeowners. Severity is more important than probability.
Responding to Risks
Financial AdvisorRisk management is especially important in healthcare because human lives might be on the line. Here are some strategies to map out a plan.
InvestingDiscover the five methods to manage pure risk, and learn how they can be implemented to mitigate risk with health and life insurance.
Managing WealthImplementing risk management strategies can save an entire organization from failure. Is yours up to snuff?
Managing WealthRisk management is a form of insurance in itself for small business owners. Here are seven steps to implement a plan.
Financial AdvisorManagers, in developing their investment process, need to determine some “general rules” that make it meaningful. We offer six.
InvestingExplore the elements of insurable risk: due to chance, measurable and definite, predictability, noncatastrophic, random selection and large loss exposure.
InsuranceWith insurance, a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss.
TaxesKnowing the tax deductions you're entitled to can make or break your bank account. Do you know about all these insurance-related deductions?
Small BusinessThere are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
Financial AdvisorPortfolio planning has never been more important or more daunting for investors. Find out the steps involved in the portfolio planning process.