Many ABA agency owners spend time wondering “if” their company is exposed to certain risks. The short answer is almost always “yes.” After all, your company faces various risks on a daily basis.
Since risk is a reality, more effective questions to ask are:
- How can I assess and manage my company’s risk?
- How much risk am I willing to tolerate?
In this post, we’re going to cover the multi-step risk management process. Following this process will help you move from reacting to risks to developing a proactive approach that helps minimize them. Fortunately, the risk management process is relatively simple. It boils down to just four steps.
The 4 Step Risk Management Process
1. Planning for Risk
The best first step to take in the risk management process is planning for risk. This involves putting together a team of management and front-of-line staff to get valuable insight into your daily operations.
Jacob Kiley, President of Liberty Behavioral Health states, “there’s often a disconnect between management and front-of-line staff.” He continues, “Management usually has a different perspective on how operations function in reality. Your front-of-line staff will often be able to provide the ground-level insight you need to adequately assess risk.”
Questions to Ask
- Who at the organization will be involved in the risk management process?
- What are their roles and responsibilities?
- Does the team include management and front-of-line staff?
- What is a reasonable budget for the risk management process?
2. Identifying Risks
After you’ve developed a plan, the next step is to start identifying risks. You can’t do this without first having a clear, objective understanding of your operations. Your front-of-line staff will be key to bridging the gap between how management perceives operations and how your business works.)
Types of Risks to Identify
There are two types of risks to identify: external and internal risks. External risks are those you face from outside pressures. For the most part, these exist outside of your control.
Examples of External Factors
- Government regulations
- Licensing requirements
- Legal requirements
- Business competition
Internal factors are what you face as a result of your business structure and services. As such, they are what you should focus most of your time mitigating.
Examples of Internal Factors
- Type of client served (Adults vs. Children)
- Type of staff hired (Contractors vs. Employees)
- Where services are provided (Home vs. Clinic vs. School)
3. Analyzing Risks
Now that you’ve identified risks, your next step is to analyze them. During this step, you figure out how the risks impact your business. The best way to do this is to place your risks into “buckets.” From there, you can determine the best course of action for risk mitigation.
Feel free to use the “buckets of risk” below to help set your priorities:
- Moderate to Low: Loss in time
- High: Serious injury to staff or client
- Extreme: Loss of life or able to put you out of business
4. Risk Response
Only you know how much risk you’re willing to accept. In some cases, it may make sense to respond by accepting certain types of risk, especially if they’re ranked ‘Moderate to Low’ during your analysis.
You can respond to the risks you’ve identified with four different strategies:
- Accept the risks. These are usually ‘Moderate to Low’ risks accepted as a cost of doing business.
- Mitigate the risks. This involves the use of loss control, shifting responsibilities, and employee training.
- Avoid the risk altogether. This would involve ceasing any tasks that are deemed too risky.
- Transfer the risk to a third-party. Whether through a contract, insurance, or some other means, this is often an effective way to control risk.
It’s worth mentioning that there are times using multiple responses to a risk can create more effective outcomes.
Do You Need Help Mitigating Your Risks?
It’s important that your insurance professional understands your business. That way your coverage is fits the way you operates. Jacob Kiley is President of Liberty Company Behavioral Health. He has specialized in helping ABA agencies create and implement effective risk mitigation strategies. If you need help creating a proactive risk mitigation strategy, feel free to give us a call at 669 266 6760 or email info@behavioralhealthinsurance.com.