Risk Management in the Workplace: What You Should Know

Risk management is defined as the action of identify and prioritizing risks in the workplace, followed by making changes to minimize and reduce these risks. Whether you run a large-scale industrial factory or a small office complex, risk management is a fundamental principle that shouldn't be overlooked. If not properly addressed, it can result in accidents, injuries, loss of productivity, damaged products/equipment, and it can leave your company vulnerable to lawsuits.

On-The-Job Accidents
One of the first steps of performing a risk management analysis is to inspect and identify problem areas which could result in employee injuries. This may include things like improperly stored products, broken or malfunctioning equipment, employees not wearing safety protection gear, slippery areas on the floor, etc. It's the company's responsible to identify and address problem areas such as these through a risk management analysis.

The truth is that most company owners don't realize the cost of employee accidents and injuries. Obviously, the company is responsible for paying the injured employee's medical bills and compensation for lost work, but it's the "hidden" costs that really take a toll on a company's finances. For instance, training a replacement employee, repairing equipment, loss of administrative time, higher insurance premiums, time spent filing paperwork, and lower morale among employees all contribute to the costs of an injured employee.

There are several steps owners can take to reduce the chance of on-the-job accidents, but the first step is to perform a risk management analysis. Once these areas of concern are located, the company can then allocate some of its resources to fixing it. Running your employees through another training program, for instance, is an effective way to encourage better safety in the workplace. Another idea is to invest in lifting equipment for workplace environments with exceptionally heavy product and goods.

Legal Liabilities
Of course, assessing legal liabilities is another key step in the risk management process. Companies need to perform an in-depth analysis of their structure to identify any areas which leave them vulnerable to lawsuits or legal action. Certain industries are more susceptible to legal action than others, but each and every company should perform an analysis of their legal liabilities. Legal liabilities oftentimes go unnoticed by business owners until it's too late.

Risk Reductions
Once "risk" areas are identified, the company must then prioritize them based on importance, followed by fixing them in a timely manner. Generally, the areas with the highest risk with the most severe penalties and repercussions are placed at the top of a company's risk management list. The company will either fix the problems itself or will hire a third party to come and make the necessary adjustments.

Hopefully, this will give you a better understanding of the risk management process. It's a systematic approach toward identifying, prioritizing, and solving key areas of concern that leave a business vulnerable to penalties. The time, money, and energy of risk management, however, will prove to be a smart investment for companies in the long run.

Mike Shannahan is the owner of Cynergy Ergonomics, located in St. Louis, Mo. Call 314-304-0221 or visit http://www.cynergyergonomics.com/ for information.

Posted by Mike Shannahan on Nov 12, 2013