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
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 Harold DePalma, go to his Attorney Profile.