Start With Risk

Any discussion of insurance should start with risk. Why? Let’s look at the definition of insurance.

Insurance is the transfer of risk for a premium. Risk is the keyword here and it means the chance of loss. You take your big bag of risk, and you pay the insurance company to take it from you. Let’s take a closer look at risk.

There are 3 types of risk:

  1. Business Strategies
  2. Business Operations
  3. Hazards

Strategic risks represent a possible source of loss and are often determined by business plan performance, business objectives, and overall business strategy. Changes in senior management, failed mergers and acquisitions, poor cash flow, problems with suppliers, vendors, or other stakeholders are all examples of risks that could impair an organization’s ability to meet its strategic goals.

Operational risk refers to the risk of losses that may result from disruption to day-to-day business operations. Some common examples of operational risk include inadequate or failed internal processes, human error, inadequately trained staff, and fraud.

Hazard risk represents a possible source of loss from something that can cause harm or physical loss. A few examples of hazard risk include electricity, pressure, chemicals, and fire.

There are 5 ways to manage the 3 types of risk:

  1. Prevent – proactive
  2. Mitigate – lessens the loss
  3. Transfer – contracts
  4. Finance – insurance
  5. Assume – pay out of pocket

These risk management solutions get more expensive as you work your way down the list. The cheapest way to deal with any major risk is to prevent it.

Are you having the right conversation with your broker? Any discussion of insurance should start with risk and examine the ways in which prevention, mitigation, and transfer of risk can eliminate the need for insurance or reduce the cost of it.

For informational purposes only. Not intended as legal advice. 

About the Author

INSURICA
INSURICA

Share This Story

Stay Updated

Subscribe to the INSURICA blog and receive the latest news direct to your inbox.

Related Blogs

New Compliance Rules Ahead: What the OBBB Means for Your Benefits Team

August 6th, 2025|Blog, Employee Benefits, Trending|

Signed into law by President Trump on July 4th, the “One Big Beautiful Bill” (OBBB) is already making waves in tax policy and Social Security headlines. But for employee benefits administrators, the bill quietly ushers in key updates that will reshape plan design, compliance, and employee communication in the months ahead.

Putting HR Technology to Work: How INSURICA Clients Gain an Edge with OutSail

July 31st, 2025|Blog, Employee Benefits, Trending|

Payroll errors that hit the general ledger, open-enrollment portals that freeze at midnight, new hires juggling four log-ins on day one - when HR technology falters, the ripple effects reach every corner of the organization. Yet most employers still rely on a patchwork of legacy systems chosen under deadline pressure.

CPR and AED Training for School Staff: A Life-Saving Back-to-School Priority

July 30th, 2025|Blog, Education|

As students return to campus, it’s important for school administrators to assess more than just academics and operations. One critical area that deserves attention is CPR and AED training for school staff. Ensuring your employees are prepared to respond to cardiac emergencies can save lives—and now is the perfect time to make it a priority.

Go to Top