Commercial Insurance covers those areas of your business that are liable to risk, however no business should view their insurance cover as a safety net should things go wrong. It is essential for businesses to follow proper risk management procedures so as to avoid and minimalise potential losses. You should involve both your company health and safety officer and your buisness insurance broker or advisor as soon as you start trading.
The term 'risk management' was probably first used in the United States in the early 1950s. It developed out of the dissatisfaction of US Commercial Insurance managers with the lack of premium credit they were being given by the insurance industry for the loss-prevention methods that were being introduced for property risks and the desire to retain more risk within large US corporations.
In parallel with this activity, the universities in the United States extended their insurance curricula to include risk and especially mathematical and statistical methods of calculating loss probabilities. The development for many years was slow, but gradually the concepts of risk analysis, loss prevention and self-insurance spread throughout North America and through multinational company activity in Europe.
More sophisticated methods were introduced to calculate maximum possible losses (MPL) and estimated maximum losses (EML), and increasing expenditure was devoted to sophisticated fire protection systems and the use of highly protected risk (HPR) standards for new properties. These activities were primarily related to more effective Commercial Insurance buying linked with the introduction of much greater self-insurance, in the form of deductibles and the establishment of captive insurance companies.
This meant that there was a tendency for risk management to become part of the business insurance function. As the insurance-buying portion of the insurance manager's job reduced and he became more active in managing self-insurance programmes and loss control budgets, the term 'risk manager' became more common and today is used by the majority of those who would have been called 'insurance manager' in previous years.
The approach to Business Insurance quotes risk management, particularly in the United States has until recent times been somewhat dogmatic in that the risk manager has been regarded as the man who manages pure or static risk within the company. In the UK and Europe the approach has always been that the risk manager acts in an advisory capacity to line management and coordinates insurance and risk management activity.
The European view, which is certainly more practical and less onerous for the risk manager, is currently gaining much ground in the United States and is now probably the more common approach both there and throughout the world. Many larger firms today have their own risk management departments, whose senior staff are usually members for AIRMIC, which is the professional body for risk managers.
Risk Management facilities for small business and large commercial enterprises are offered by most specialist Insurance Brokers alongside their Commercial Insurance, Business Insurance policies and Commercial Insurance package covers and offerings.
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