In the shadow of death, where the sick outnumbered the swords, a beacon of hope emerged: Florence Nightingale (1820–1910), whose hands, armed with soap and compassion, fought a different kind of war in the Crimean battlefields. Nightingale led the nurses caring for thousands of soldiers during the Crimean War and helped save the British army from medical disaster. Conditions at the military hospital at the port in Scutari (modern-day Üsküdar in Istanbul) were so appalling that the death rate was up to 50 percent - higher than the battlefront! When this report reached England, Florence was asked to take a team of nurses to see if they could help.
In November 1855, a team of nurses, under Florence's direction, began scrubbing and cleaning. The following month, a shipload of clean linen, bedclothes, bandages, scrubbing brushes, and a cook arrived, courtesy of Florence's father. By April 1856, the death rate had fallen to 12 percent and within six months it had lowered still further to 2 percent. This famous British nurse, who changed history through her radical treatment of disease using improved nutrition, hygiene, and sanitation, wrote a book called Notes on Nursing in 1860.
Nightingale’s pioneering approach, which dramatically reduced mortality rates through stringent hygiene practices, underscores the timeless principle that proactive measures are crucial in mitigating risks. Similarly, in the modern business context, companies must adopt a forward-thinking stance on risk management. Just as Florence’s preventive strategies in healthcare became a standard, today’s organizations must recognize that comprehensive risk management goes beyond mere insurance policies to ensure sustainability and resilience against unforeseen challenges. While no organization can see around every corner, those who make the effort to identify, connect, and counter risks will win in this new - and increasingly complex - normal.
Despite the clear and present dangers, many companies fail to prioritize risk-management programs, relying solely on traditional insurance coverage, a strategy that falls short in today's volatile environment. Not to mention that, in the current insurance landscape, some insurers demand a risk-management plan to give you desirable coverage…or to cover you at all.
In trying to build out risk-management programs, there are four components that every executive team should consider as they work to protect the long-term viability of their business.
Build a culture of safety around the reality of risk
Business operators are inherent risk-takers. Without risk, your company can’t grow, and you can’t transform your industry. Risk management is a function of understanding what those risks are and aligning your internal stakeholders on mitigation - from the boardroom to the factory floor. Begin with buy-in from your board of directors and executive team. Their support is a must for getting HR, safety teams, directors of insurance, legal, IT, and others committed.
Evaluate risks, large and small
Some of the best risk-management cultures encountered weren’t from a Fortune 500 company, but privately held, family-owned businesses. They committed to educating their entire executive team through annual risk summits, researching scenarios, and building out plans. Incredibly, some worked through pandemic risks two years before COVID-19 emerged.
Working through existing problems, planning for potential future issues (both large and small), mapping out how those events could impact the entirety of your business and its assets, and then executing whatever those plans are, all while keeping the receipts along the way to demonstrate what you’ve done and are planning to do, is an exhausting approach - but a necessary one.
Consider your people, physical assets, balance sheet, and P&L
The foundation of an excellent risk-management program comes from considering four key elements: Your people, your physical assets (such as factories or equipment), your balance sheet, and your P&L or ability to produce revenue. You may also consider environmental impacts, investors, creditors, and so on, but these four points are the most critical to evaluating any business.
Once you’ve identified assets that could be put at risk, quantify the potential damage. Minet can perform modelling on your behalf to help you understand the probability and severity of an incident, and whether you’re correctly protected by your insurance.
Next, there are several critical areas to address in terms of risk management implementation:
- Training and education, including how you inform employees about the availability of onsite clinics or help them understand the other aspects of on-the-ground safety. Think about what teams should be involved (likely the risk team, safety team, and HR) and how you can reiterate safety throughout the employee lifecycle.
- Worker safety programs, which include safety gear, training, and established boundaries. Always involve carrier partners, welcome their input, and ask what they may offer your clients along the way. This helps carriers feel invested in the process - and it makes sure you have all your bases covered. Minet does offer training or assistance with required expenses. Some insurance companies deliver the training or will give you money toward the cost of buying Personal Protective Equipment (PPE).
- Housekeeping standards and knowing who owns different aspects of your risk management process is a necessity. Furthermore, consistent coaching and rewards for good behavior must be employed.
- Employee mental health and well-being, promoting a culture where your team can feel safe voicing their opinions and pointing out issues on the shop floor is key as well. Leaders who listen and make changes create a safer workplace.
You’ll also need to determine how you’ll measure your success in your risk-management program. A risk-management committee can continue these conversations and create a culture of safety. Your broker can help with implementing effective strategies and quantifying progress toward your desired outcomes.
Plan how to regroup after an event
The true test of a risk-management program lies in the aftermath of an event. Companies must be prepared to spring into action. Smaller and middle-market producers will often lean on their broker and insurance company to help them handle the situation. However, organizations will be up and running faster after a crisis if they have risk management as a core of their organization.
Whether it's a supply chain disruption, a cyber breach, or a workplace accident, having a well-defined response plan is paramount. In the case that you don’t have a robust risk-management plan before an event, you could face catastrophic losses. If you’re able to recover, you’ll likely need to create a risk-management roadmap to prevent your organization from being dropped from your current provider or to regain coverage from a new insurer.
Conclusion
I recently toured the Total Energies EP Uganda (TEPU) Tilenga Project, a camp with a lobby covered in hours' worth of safety awards - it looked like a museum. In August 2023, TEPU’s Tilenga Project achieved the 20 million Man-Hours without Lost Time Injuries (LTIs) milestone. This achievement came because of the safety culture of continuous vigilance and mitigations that TEPU has managed to maintain among its staff and contractors. This display was not just for the benefit of visitors, but a source of pride for the entire company. Their risk manager beamed as he told me how risk management is their childhood game. Creating a culture like that can go very far in not only improving your relationship with risk but becoming a better company as well.
By investing in proactive risk-management measures, companies cannot only mitigate potential threats but also enhance the company’s long-term viability and drive sustainable growth. Moreover, when you’re negotiating in the market and trying to find insurance partners who will take your risk onto their balance sheet, you need a very clear picture of all the reasons they should work with you. If you’ve done the work of establishing a risk-management plan, then you’ll get credit for it.
Hopefully, after reading this, you won't need Florence Nightingale-level interventions to save your business from risk-related disasters. But seriously, take action – a proactive
approach is much more pleasant than mopping up after a mess. As a valued reader, I'd like to offer you a special benefit. To show my appreciation, I'm happy to draft the acceptance speech for your next safety award, because, why not?
David Sanyu | Medical Claims Handler – Employee Benefits | Minet Uganda
References:
https://www.newfront.com/blog/four-essential-components-for-manufacturing-risk-management-programs
Barbara_O'Neill_Self_Heal_by_Design_ Pages 21-22. https://www.scribd.com/book/669324080
https://totalenergies.ug/system/files/atoms/files/lets_talk_bulletin_-_safety_1.pdf
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