Ironman Triathlon is considered by many to be the toughest single day event created by mankind. This endurance race consists of 3 disciplines:
- Swim 2.4 miles
- Bike 112 Miles
- Run 26.2 miles
All three of these disciplines must be completed within 17 hours to be considered an official Ironman. After completing my third Ironman race, two things occurred to me:
- The man that invented that race is not so kind
- Training for and completing that race very much parallels the Risk Management strategies that I had been professing for my entire career.
In the coming months, we will get into many of the specific parallels between Ironman and Risk Management, but one of the greatest lessons learned from that experience is:
In order to accomplish anything worthwhile, you must first define the “WHY“
Deciding how you want to run your business one way, versus another, is no exception. So one must ask, “WHY” would I want to focus more on managing my Risk, versus simply buying insurance in the traditional manner. After all, most businesses have bought insurance (reluctantly) the same way for 100+ years.
The answer is simple. Impact on Profitability
Buying insurance impacts the profitability by managing expenses. Managing Risk impacts profitability, not only by managing expenses, but also by improving efficiency, productivity, mitigating the direct impact of losses and indirect impact of losses, employee moral…… The list goes on and on. But the bottom line is that properly Managing Risk impacts every line of your financial statement and not just expenses.
In fact history shows that for every dollar an insurance agent can save you in premium, a properly implemented Risk Management plan can save you 5-10+ times that amount.
So I suppose one does not have to simply ask “Why” would I take a Risk Management approach to my business, but instead one should ask “Why Not” take that approach.