As a small business owner it is natural to be focused on making a profit, while
providing quality products and services to your customers. However, keeping an eye
on risk management and loss prevention can help you avoid common financial consequences
to your small business. Loss control, in conjunction with a solid risk management
plan, can keep you in business, while helping to maintain a good reputation among
existing and prospective customers.
What is loss control?
Loss control involves several different approaches taken to reduce both the severity
and frequency of loss to employees, customers, equipment, and products. Put simply,
loss control is minimizing risks.
This multidisciplinary approach takes into account risk management, human management,
and technology management in an effort to prevent or minimize financial loss. Loss
control takes puts an action plan in place to reduce, minimize, or eliminate hazards
and risks that could potentially lead to claim or accident which results in a loss.
Loss control includes a combination of risk control techniques including insurance
and noninsurance transfer of risk. Other techniques that minimize the risks of an
individual or business include segregation of exposure risks, risk avoidance, workplace
safety, machine guarding, industrial hygiene, fire and explosion safety, noise control,
product control, and risk retention. Safety award programs for employees, including
drivers, are another good loss control technique.
Hazards may be from unsafe acts, human error, or from the workplace itself through
unsafe environmental conditions. An explosion, fire, or accident in your place of
business can not only result in a temporary (or permanent) business stoppage, but
can mean a loss of god will.
A sound loss control plan analyzes past claims to determine causes and patterns
of losses. It also involves evaluating current loss control measures and compares
them against expected results. It may also include the implementation of specific
risk management programs.
In summary, loss control can be:
1) Transferred to another person or entity, such as an insurance company.
2) Retained through self-insurance or high deductible
3) Avoided. Although not all risks can be avoided.
4) Reduced through education and training, installing safety devices, implementing
workplace safety programs.
The overall goal of loss control is the reduction in the frequency and severity
of insurance claims. It behooves every small business to have a sound loss control
program to minimize accidents, repairs, business downtime, fines, lawsuits, and
insurance claims.
