In any company across the globe, risk is present. This is why it is so important to have structured loss control strategies in place. These strategies are realistic ways to recognize, track, and handle risks that could have a negative impact on your company. The first important step is to describe the risks resulting from what you own, what you do, and who does it.
All organizations should carefully examine their business risks. It should be assessed, so that you are aware of the probability and severity of a failure, after you’ve established all the insurable risks.
Make Extra Copies
It is important to keep a copy of all important information. This includes critical documents as well as spare documents. Copies should be kept in reserve, in the event the original documents are damaged or destroyed. You should consider storing them on a backup server. This will reduce your dependence on a single document. As a result, you will only experience minimal loss of your essential documents.
Implement Preventative Measures
Certain risks are unavoidable and, therefore, preventative measures should be implemented. This will help reduce loss frequency. For example, installing video surveillance cameras can prevent the frequency of theft in stores. Additionally, lowering a highway speed limit can reduce the number of automobile accidents on a specific road.
Loss prevention measures break the sequence of events leading to a loss. It, thus, makes a loss less likely to occur. The chain of events leading to a loss is disrupted, when loss preventative measures are in place.
Avoid Taking Risks
You may eliminate possible losses associated with that risk, by opting to avoid a specific risk entirely. For example, in inclement weather, builders may choose to shut down building operations; manufacturers may choose to pause the production of defective goods, before selling them to consumers. Although risk avoidance is a simple method of loss prevention, this technique may not always be realistic. This is because it can lead to lost revenue opportunities.
Take Reduction Measures
To minimize the magnitude of future losses, reduction measures should be applied, before and after a loss occurs. For example, a pre-loss measure would be to erect firewalls, to reduce damage from a fire. Also, activating a fire detection/suppression device is a post-loss measure. By adopting this technique, the physical and financial consequences of a loss are minimized.
Diversify Your Work
You should spread exposure to losses across various goods, programs, goods, regions, or markets. A company, for instance, may enter into various geographic markets. The other markets can still produce enough profit for the company to continue operations, if one market becomes too competitive. By diversifying your work, it avoids the loss of a significant percentage of the assets of the company. This can occur, by a single event or sequence of events. Additionally, to ensure long-term sustainability and profitability, loss control strategies are essential.
Separate Items from Each Other
By separating items from one another, you can minimize the detrimental effects of a single loss. For example, storing goods at two separate warehouses will minimize losses, if one facility were destroyed. The separation of exposure units can reduce an organization’s dependence on a single asset, process, or entity, thereby minimizing individual losses.
Loss control is a form of risk management that will help protect your investment. This is why it is important to implement loss control strategies, as described above. These strategies include prevention, reduction, separation of items, avoiding risks, diversifying your work, and making extra copies. By implementing these strategies, it will ensure you have taken the necessary steps, to avoid the detrimental loss of your business.