Risk Management Can Be Proactive Or Reactive

Risk Management Can Be Proactive Or Reactive

December 7, 2018 Business Insurance and Risk Management, The Beacon Blog 0 Comments

A recent blog by Carol Williams (https://www.erminsightsbycarol.com/risk-reduction/) discussed risk reduction as a strategy for managing risk. Some of her examples – exiting a market, discontinuing a product – are akin to another risk management strategy: risk avoidance. The difference between the two is that avoidance is proactive while reduction is reactive.

In proactive risk management, before any major change in operations – new projects, new processes, expansion – analyze the costs and benefits and consider what could go wrong before starting. If the chance of loss is too great, avoid the risk. Reactive risk management is looking at existing operations that are not going well and using risk control, reduction or transfer to improve results.

Proactive and reactive risk management are not mutually exclusive. Risk management is a continuous process, from initial analysis through developing and implementing strategies to monitoring results. Risk is not static, and what worked in the past may not suit present conditions.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.