|
WHAT IS
RISK MANAGEMENT?
Many people running a business, non-profit or a church think that risk management begins and ends
with purchasing an insurance policy. However, purchasing sufficient insurance to cover your risks is only the final step
of an effective risk management program.
An effective risk management program has three goals:
1) Risk Allocation
– When you enter into a relationship with someone to provide a product or service, risks of legal liability to you and the
other party are often created. It is important that you properly allocate those risks at the start of the relationship through
a written contract or agreement. At minimum, the contract should allocate the risks to the party best able to control the
particular risks. Preferably, the contract should also allocate as many shared risks as possible to the other party to the
agreement to minimize your legal exposure.
2) Risk Mitigation – Once you have allocated the risks through a contract,
it is important that you mitigate or reduce any risks which you have agreed to retain. This is accomplished through proper
direction, instruction and supervision of your employees and their work.
3) Risk Financing – Of course, it is impossible
to completely eliminate all risks arising from your work. At minimum, you will need to obtain all insurance coverage required
by the work contracts into which you enter. Additionally, you may need to consult with an insurance broker with experience
in your industry to determine the type and amount of insurance coverage necessary to meet risks not addressed by the insurance
required under your contract agreements.
WHY DO I NEED A RISK MANAGEMENT PROGRAM?
An effective risk management
program seeks to avoid lawsuits by allocating risks to other parties, reducing the risks that you still retain and by insuring
against the risks that you cannot allocate or eliminate.
Like most people operating a business or church, you are busy
enough just getting through the day's work. The last thing you want to deal with is a lawsuit over a claim that could potentially
bankrupt you or your business.
By some estimates, Americans are now paying over $250 billion each year in damages
and legal expenses to settle lawsuits.
Even if you have adequately insured yourself against the damages claimed in
a lawsuit, you will still suffer substantial additional litigation costs. Lawsuits often take one to three years to litigate.
During that time you will have to spend dozens of hours away from work and your family finding and copying documents, speaking
with your attorneys, giving testimony at deposition and then attending trial. Insurance will not compensate you for this
lost time and expense.
Additionally, your insurance premiums could substantially increase if your business, firm
or church becomes the target of lawsuits.
The only way to avoid these substantial uninsurable costs is to allocate
away the risk or eliminate any that you still retain.
HOW CAN THE DEPALMA LAW FIRM HELP YOU CREATE AN EFFECTIVE RISK
MANAGEMENT PROGRAM?
Mr. DePalma can assist your risk allocation by negotiating and drafting new contracts and by reviewing
and revising your current standard contract forms so that the maximum amount of risk is allocated to other parties and away
from your business, firm or church.
Additionally, Mr. DePalma can review your current insurance polices to determine
if they meet the requirements of any contract to which you are a party. However, Mr. DePalma does not have the expertise
to advise you whether you have adequate insurance coverage to meet the risks your business, firm or church may face. For
that service, you should consult an insurance professional with experience in your particular industry.
Finally, if
the risks you face have turned into legal claims, Mr. DePalma can represent you in matters concerning personal injury, property
damage, construction defect and breach of contract. The objective of such representation would be to quickly and cost effectively
resolve any claims through negotiation or mediation before litigation costs begin to mount.
Thank you for your kind
consideration of The DePalma Law Firm, LLC in your search for legal services. I look forward to representing you.
To
find out more about The DePalma Law Firm, go to our Home Page.
To find out
more about Bart DePalma, go to his Attorney Profile.
|
