Risk Management and Insurance

By VHMA Admin posted 12-26-2019 13:14

Risk Insurance Graphic

Unfortunately, the world is a riskier place than it used to be, and risk management has become more important to businesses than it used to be. Per www.businessdictionary.com, the definition of risk management is: “the identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer or any other strategy (or combination of strategies) in proper management of future events.”

There are many different kinds of risks a business faces, some of which have been around for a while, such as the risk of a fire destroying the practice facility, key employees quitting, or the theft of inventory items. Unfortunately, there are also some new risks out there that businesses are still coming to terms with how to manage; these include data breach/cyber liability and random workplace shootings.

Many strategies exist for use in risk management. Effective interviewing and hiring techniques help in the selection of people who will be a good fit in your practice. Solid inventory control reduces the likelihood of product theft. And, of course, insurance is one of the most common and time-honored risk management strategies available. Insurance is a form of risk transfer.

VHMA asked practice managers, “What risks to your practice are you most concerned about?”

Interestingly enough, the risk causing the most angst is a relatively new risk (i.e., within the last 20 years)—that of cyber/data breach. Given the significant reliance on computers seen in most practices and the increase in hacking, this makes sense.

Practice managers indicated that the most common insurance policies they carry for their practice include general liability property, professional liability, and workers’ compensation - some of the more “traditional” forms of insurance that practices have carried for many years.

Sixty-eight percent of practice manager respondents said that they have had to file a claim on behalf of the practice or practice owner. The majority of respondents who did file a claim indicated it was for injury due to contact with an animal (Workers Compensation). Most of the claims filed settled for less than $5,000.

Managers indicated that they review their policies annually, which is appropriate. In addition to checking the policy limits, the coverage itself and the premium cost should also be reviewed. Price shopping policy costs and coverage annually is also prudent. Remember, however, not to purchase policies simply based on cost. Making sure the coverage is what is needed for the hospital and that the insurance company has a good reputation and a strong history for promptly paying claims. Working with a good insurance agent or broker who is both an insurance expert and knowledgeable about the veterinary industry is the way to go.

Read the full report, VHMA Insiders’ Insight – December 2019.