As a dealer, you know that things don’t always go according to plan. Knowing what risk you face can help you be better prepared.

While success in business always involves some level of risk, taking the right steps now can minimize the likelihood of an inventory loss, liability lawsuit or serious incident affecting the wellbeing of your business.

Developing a risk management program at your business can help you manage the risk you face and protect your inventory and employees from harm and shield your business from associated costs.

Risk Management Program Fundamentals

A successful risk management program should be developed proactively ahead of potential risks, so that you aren’t caught off guard by the unexpected. For this reason, organizational leadership should take responsibility of planning.

All successful risk management programs start with 4 key fundamentals:

  1. Reasons and objectives: State the reasons for establishing the program. Your objectives help determine a proper depth and scope for your program development.
  2. Policy statement: Draft a policy statement to share with employees. Outline program objectives and explain the goals of a successful and effective program.
  3. Assignment of responsibilities: Assign responsibilities to all employees. Ensure everyone gets involved and has a role to play in program success.
  4. Plan for communication: Implement a system for quick and efficient communication between employees and leadership. Reviewing program results can also help identify areas for modification and improvement.

Establishing program fundamentals will give a supportive foundation for developing your risk management program. Keep in mind that a successful program takes time to build. New elements can be added as needed and past policies can be refined for better results, once a strong foundation is in place.

Elements to Include in Your Program

For dealers, these 7 program elements have been shown to lead to safer operations and fewer accidents and claims.

  1. Selection and placement of personnel: Remember that your people are the first line of defense against the risks you face. Proper role placement is key, so assign the most qualified person to each role.
  2. Facilities and equipment: Minimize unnecessary product damage by maintaining and improving warehouse facilities and equipment. Think ahead about risks from weather, workflows, storage and equipment to prevent damage.
  3. Inventory control: Leverage technology to better control inventory. Proper management can help prevent supply and demand challenges, inventory theft and business losses.
  4. Training: Implement a program to provide initial and ongoing training for all employees.
  5. Safety inspections: Establish procedures to maintain workplace safety and protect product stock. Check regularly for any unsafe conditions or operating procedures.
  6. Emergency preparedness: Designate procedures to follow for natural disasters, accidental fires or floods, employee first-aid and treatment of injuries.
  7. Engagement and motivation: Keep employees engaged in the business’s risk management efforts. Encourage workplace safety with incentives and rewards.

Five Strategies for Reducing the Risk to Your Business

Businesses like yours face risks unique to the inventory industry. Make sure your risk management program addresses these added business risks. Here are five simple strategies you can easily implement:

  1. Don’t rush hiring: Pre-screen candidates and hold one or even two interviews before hiring to ensure a good fit and minimize turnover.
  2. Optimize warehouse workflows: Reduce the risk to product inventory with more efficient processes and systems that reduce the rate of damage.
  3. Implement equipment operator guidelines: Ensure equipment operators have the proper training and certification and adhere to safe operating procedures.
  4. Manage weather risks: Develop an emergency plan for severe storms. Take preparation, facility vulnerabilities and stock into account. Consider developing a plan to relocate your inventory in the event your inventory is in the path of an impending storm. Your current policy through Lockton Affinity provides up to $50,000 per occurrence for Emergency Removal Expense of insured inventory.
  5. Encourage a culture of safety: Build a culture of safety through procedures, training, signage and incentives to help protect works and reduce inventory damage.

For more information about developing a risk management program and inventory insurance for your business, contact Lockton Affinity.