The information included on this website is designed for informational purposes only. It is not legal, tax, financial, or any other sort of advice; nor is it a substitute for such advice. The information on this site may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate, in parts. It is the reader's responsibility to comply with any applicable local, state, or federal regulations, and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company, its affiliates, and their employees make no warranties about the information, no guarantee of results, and assume no liability in connection with the information provided.
Business Solutions Center
Run Your Business
Loss Control and Risk Management for Small Business
Regardless of a company's size, loss control is an important function that tries to reduce loss by identifying types of undesirable events or losses, and trying to prevent those losses or, at least, to mitigate the physical or financial effects.
Commonly associated with insurance planning, loss control also encompasses loss prevention and control to provide a holistic view of what can go wrong at a company and how the business should respond.
Unlike larger companies that have dedicated loss control and safety professionals who specialize in the field, small businesses have to rely on staff and outside resources, such as those offered by your insurance company, to develop the most effective risk management strategy for their needs.
The first step in any risk management plan is spending time to think about potential exposures and losses. These risks can come in an array that may include property damage, legal liability, employee accidents or injuries, disaster recovery, technology outages, and other losses.
Your insurance agent and carrier will offer a variety of resources to help you identify and understand potential risk, and can arrange access to experts who can provide specialized advice about reducing your company's risks.
The next step is thinking about the potential effects of each risk. Some exposures, such as the loss of your workplace in a fire, may be catastrophic, while others may be relatively minor. It's important to understand the difference so you can direct your risk management efforts to the most important exposures. This does not necessarily mean that the exposures identified as most severe should be the highest priority. High priority items might include “minor” losses such as auto physical damage or liability exposures if they occur with enough frequency to create a meaningful total risk exposure.
The next step is developing ways to reduce those risks and their potential effects. For example, you might update your vehicle safety program or invest in technologies like Automatic Emergency Braking (AEB) to proactively address auto losses. Additionally, instead of storing your inventory in one facility, it may be a good idea to divide it between two smaller storage areas so a fire at one building wouldn't destroy all of your inventory.
Once you've identified the risks, categorized them by severity and frequency, and identified potential mitigation strategies, the final step is arranging property and liability insurance to provide financial protection if a loss occurs.
Even with the best of intentions, things can go wrong, and it's important to ensure that a relatively minor loss won't impact your company's financial position. Insurance provides an important financial backstop that helps you concentrate on running your business and serving customers.
To learn more about loss control and risk management, visit www.mylosscontrolservices.com.