Profitable Risk Management

Today, workplace safety, employee screening, and other risk management practices are being viewed by successful dealerships as a way to improve the bottom line. Why? Because expenses related to workers compensation claims, auto accidents, medical costs, legal fees, lost production time, and stolen or damaged equipment can quickly add up. And, how do you put a price tag on an employee’s on-the-job injury or death?

Every injury, every lawsuit, every poor hire, every missed opportunity to plan for the future can pull money out of your pocket. A single injury claim can cost tens of thousands of dollars in both insured and uninsured costs. Insurance is designed to pay for the direct costs, such as property damage, medical bills, and legal expenses. But, who pays for the expenses related to hiring and training a new employee, lost productivity, lowered employee morale, damaged company reputation, and potentially higher insurance premiums? The answer is you.

Think about that: A chunk of your profits can be lost every time an employee slips, strains, falls, or fails to follow company policies and procedures. Even seemingly small injuries can result in major financial consequences.

Even the best businesses can get better. A risk management culture—the sum total of all the efforts, attitudes, and investments related to workplace safety and preventing losses at your business—can help protect your people and your profits. From senior management to front line employees, making risk management a top priority can have a significant financial impact.

Federated Insurance clients repeatedly echo four points regarding the value of a risk management culture and its positive impact on businesses.

It has to start at the top. Management should model good behavior, reinforce a “safety first” message, and invest time and resources to implement sound policies and procedures. Without their buy-in, it’s difficult to establish a successful risk management culture.

Empower employees. Give employees the tools and incentive to take ownership in a risk management culture. Set clear expectations; then, reward positive behavior.

Take control. Many claims experienced by Federated policyholders are preventable. Create and enforce policies related to safety, conduct, and hiring. Designating a risk manager to surround these critical practices is one way to take the reins.

It has a financial impact. “Hidden” expenses can quickly add up. Additionally, losses can impact your workers compensation experience mod, which may lead to higher insurance costs.

To help you learn ways to avoid the risks your dealership faces, EDA’s recommended insurance provider, Federated Insurance, provides an opportunity for association members to attend the November 14-16 Federated Insurance Risk Management AcademySM free of charge. Registration information is available online. Or, for further details, contact your local Federated marketing representative.

In a competitive business world, where the pressure to turn a profit is often the highest priority, it’s tempting to sweep risk management under the rug. That could be a costly mistake. Focus on a risk management culture, and you can positively impact your dealership’s bottom line.


Laramie Sandquist, CPCU, ARM
Federated Mutual Insurance Company