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With insurance prices soaring, it is crucial to gain the best value for your premium dollar. That means looking beyond your insurance policy and examining your organization as a whole. Doing so will give you a true risk management program. And while big organizations need a sophisticated risk management program, small and medium-sized nonprofits will benefit from a basic one. Use these four steps to create a risk management program for your organization: 1. Assess your risks. 2. Control your risks. 3. Determine your insurance needs. 4. Administer your risk management program.

With insurance prices soaring, it's crucial to gain the best value tor your premium dollar. That means looking beyond your insurance policy and examining your organization as a whole. Doing so will give you a true risk management program. And while big organizations need a sophisticated risk management program, small and medium-sized nonprot its will benefit from a basic one. Use these four steps to create a risk management program for your organization:

Step 1: Assess Your Risks. The first step is to determine what your risks really are. Take a close look at your organization, and answer these c|uestions:

* What are your total assets?

* What are your organization's major exposures to loss?

* What's the value of your organization's assets and resources?

* What is your current risk?

* How would you estimate your organization's future loss potential?

* Who might sue you, and what property might you lose?

* What kind of losses has your organization had in the past?

* Are some losses preclietable?

* What are the worst-ease losses you could have in terms of property, liability, and business interruption?

* What steps can you take to reduce the probability of loss?

The risk profile for every organization is unique. If you own your building, for example', you have different risks than a renter.

Ask an experienced commercial insurance broker to give you an unbiased review of your risk management program. Besides using your current broker, it's often a good idea to get a second opinion from another broker.

Once you've taken a thorough look at your organization, you may be surprised at what risks you do (and perhaps don't) have. Review your risks at least annually. If your organization is sizable, consider quarterly reviews.

Step 2: Control Your Risks. The second step is risk control (also called loss control). The goal of this step is to develop a program to reduce or eliminate risks.

Even organizations with good loss records aren't exempt from premium hikes. Insurers factor in what they see as loss potential. Underwriters are worried about what could happen. Of course, it helps to have a good record. But whether your organization has a good, average, or poor loss record, you should take steps to show the insurer that you're doing everything within reason to prevent future losses and claims.

Making your organization a safer place for your employees and customers will make it a more attractive "risk" to an insurer and help you avoid claims over time. When more insurers compete to insure you, you'll get a better deal. Insurers often reduce premiums for organizations that demonstrate they've acted to reduce the number and size of their losses.

Loss control has several facets. One is safety. A loss-control professional can inspect your workplace and make sure you've removed or reduced all significant hazards - unsafe conditions that could cause fires, chemical spills, slips and falls, and other injuries or property damage.

Sometimes a small change can make a hig difference. One organization, for instance, had a rash of customers slipping and falling at its entrance, causing some expensive insurance claims. Safety consultants discovered that the terrazzo floor became wet and slippery during rainstorms. Installing non-skid flooring solved the problem.

Workplace safety is crucial because accidents will drive up your workers' compensation rates. A safety expert can show you how to correct any unsafe conditions. Equally important, a professional can help you ensure that working conditions and practices are ergonomic, reducing bruises, cuts, back strains, ami repetitive-stress injuries like carpal tunnel syndrome.

Loss control isn't only about decreasing accidents. Reducing the chance of lawsuits is equally important. One of the biggest risks any organixation faces today is getting sued by a disgruntled current or former employee. More employees and ex-employees are suing their employers, claiming that they were fired, underpaid, or not promoted because of their race, gender, or sexual orientation. Sexual harassment complaints also continue to rise.

To lessen these risks, you need effective personnel policies and procedures for hiring, firing, and promoting. Sensitivity training, legal audits, diversity counselors, and access to lawyers who are expert in handling employee terminations can all help cut your risk. Your broker or insurer may have educational materials and model personnel policies you can use so you don't have to start from scratch. Insurers recognize the effectiveness of these programs and often give premium credits to organizations that have adopted them.

Step 3: Determine Your Insuranee Needs. Now tliat you've identified your risks and done some initial loss-control work, you're in a good position to take a strategic look at your insurance program. This step includes buying insurance and managing your deductibles.

Consider taking higher deductibles to save money. Insurance is meant to cover losses you can't comfortably afford. However, most organizations have deductibles that arc too small, adding unnecessary cost. By taking on more of the risk yourself - in other words, self-insuring a larger deductible - you can often reap considerable savings. (Workers'compensation is an exception because no deductions arc permitted for it.) Often, it makes sense to take a higher deductible and use part of the savings to buy more liability insurance to cover you just in case you're sued for a large amount.

Using insurance to cover predictable losses isn't cost-effective. For instance, if your expected theft losses are $1,000 a year, you'll want to "self-insure" this amount, as the insurance organization will charge more than S 1,000 in premiums to cover these expected claims. (Besides reimbursing you for the loss, the insurer must cover its overhead and administrative costs.) Instead of relying on insurance for small, expected losses, consider setting up a reserve fund to cover them. Examining your organixation's loss history can help you select the proper deductible for each type of insurance - property, liability, business interruption, and bonds.

To get the best results, you need strong, two-way communication with your insurance broker. It's important to work closely with a broker who understands your organization. Such a person can serve as a consultant and work as your partner to meet your organization's risk management needs.

Have your insurance broker shop around well in advance of your policy's renewal date. About three months before renewal, your broker should start working on getting price quotes from several different insurers. Because of the tight market, it's important to get started earlier than usual. You can help your broker get the best deal by providing detailed information about your organization and any claims it has filed in the last few years. Insurance underwriters need this information to get a clear picture of your organixation.

Step 4: Administer Your Risk Management Program. The final step is to create a well-defined risk management program with clear objectives. The goal is to eliminate uncertainty whenever possible. Review your risk management program regularly. With a carefully planned, ongoing risk management program, you can get the coverage you need at a price you can afford.

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