Risk Management

• 1. Get a proactive insurance representative.

  Choose a commercial insurance agent or broker who knows your type of business and is willing to invest the time and effort to understand your specific needs.

• 2. Consider your priorities.

  Work with your insurance representative to identify potential losses that could critically threaten your business and then get coverage that meets those needs.

• 3. Focus on prevention and take a systematic approach.

  1. Identify and analyze direct, as well as indirect loss exposures, such as:

     • physical property, such as buildings, stock, contents and equipment

     • valuable information that’s critical to your business operations

     • cost of repairing or replacing damaged property or equipment

     • loss of revenue and extra expenses in the event of a business interruption

     • risks where you could be held liable for damage or injury

  2. Examine the feasibility of alternative risk management techniques. Ask your insurance representative for information about appropriate risk management activities.

  3. Select the best risk management techniques and/or actions.

  4. Implement techniques and/or actions, such as:

     • install approved sprinklers, intruder alarms and fire alarms

     • secure all doors, windows, skylights, storage and low-traffic area

     • isolate flammable materials and properly dispose of waste materials

     • leave some lights on and windows clear so interiors are viewable

     • encourage employees to be watchful and careful

     • register emergency contact info with police and fire departments

     • consider hiring a security guard when conditions warrant

  5. Document, monitor and review your plan regularly. Having an effective risk management plan in place can also:

     • save resources such as time, assets, income, property and people

     • protect your business’ reputation and public image

     • prevent or reduce liabilities and increase operational stability

     • protect people and the environment from harm

     • put continuity plans in place for the most likely loss scenarios

     • assist in clearly defining insurance needs

  While it's not possible to eliminate all potential risks, having a documented, regularly updated risk management plan is a commitment to loss reduction and prevention. It can help make your business a better risk to insure and even reduce your premium. Talk to your insurance representative about coverage and risk management best practices that suit your industry.

Business premises and liability risk management

• Managing business property risks

  Managing property risks that could have the most significant cost or negative impact is important. Use these tips to keep your property – and the people on it – safe:

  1. Create policies and procedures for handling the property of others. Keep property in a secure area. Ensure property you do not own is returned to the correct owner.

  2. Keep people safe. Don’t allow visitors, clients or customers into restricted areas. Ensure all premises – including parking lots and sidewalks – are well lit, neat and tidy and regularly inspected and maintained.

  3. Pre-inspect property belonging to a third party before assuming custody. Take photos, document condition, make note of any needed repairs or replacement and ensure the property owner and user sign and have copies of the inspection form.

  4. Conduct a final inspection and compare conditions with the pre-inspection with the owner before returning the property. Sign and keep a copy of the final inspection form.

  5. Ensure enough trained employees and/or volunteers are on duty to protect visitors, clients or customers from potential harm.

  6. Give adequate warning.

     • place warning labels on potentially hazardous products

     • place signs to deter visitors, clients or customers from restricted areas

     • provide instructions on how to operate equipment, handle materials and/or products, etc.

• Fleet or commercial vehicle risks

  Regardless of how many commercial vehicles are part of your business operations, it’s your responsibility to manage risk. Be proactive and use these risk management tips.

  1. Know your fleet’s losses. This includes types, causes, sources, number and cost of losses as well as the frequency and severity of risks, trends and benchmarking with those of others in your industry.

  2. Create fleet policies and procedures that include:

     • a motor vehicle safety policy that establishes the organization’s safety philosophy and driver performance standards

     • vehicle selection and acquisition policies that establish minimum safety requirements

     • a preventive maintenance program. Schedule and document regular inspections and service as well as follow maintenance schedules specified in each vehicle’s operating manual

     • driver screening and hiring policies – minimum years of related experience, a maximum number of traffic violations and other standards

     • a detailed list of unauthorized activities, such as driving while impaired, personal use of business vehicles and driving outside of specific geographical areas

     • driving standards such as a night driving policy, maximum speeds and safe following distances, fuel storage and disposal instructions, parking and reversing procedure

  3. Get your drivers involved in risk management. Require drivers to read provided manuals and abide by all policies and procedures. Ensure all drivers:

     • know current documented standards. Ensure they get policy or procedure changes and sign to acknowledge their understanding and responsibilities

     • are focused on safety. Ask drivers for feedback on how to improve fleet safety. Ensure drivers receive regular training and refresher courses. Recognize drivers for maintaining safe driving records

     • are prepared for a collision. Ensure drivers know what do to if they’re involved in an incident and how to contact their supervisor and emergency services. Make sure appropriate emergency supplies are stored in all vehicles

  4. Prevent after-hours theft. Ensure vehicles are stored in a safe place. Be proactive and install alarm systems, lock vehicle doors, ensure valuables aren’t in plain view. Maintain safe indoor storage systems – ventilation, fire suppression systems, fire alarms and other safeguards – for all vehicles. Consider using different buildings or storage locations to separate vehicles.

  Dive deeper

  • Owner-operator and small commercial truck fleets: how to secure affordable insurance 

• Liquor liability

  If you operate a restaurant, bar, club, conference centre, hotel or other business where alcohol is sold or served, you need to manage and mitigate liability risks. In addition to complying with municipal, provincial and federal liquor regulations, there are other steps you can take to manage risk. Your insurance representative can provide additional information about liquor liability and the risks that are covered in your insurance policy. Anyone involved in the serving of alcohol to an individual which leads to damage or injury could be held liable for such damage or injuries when alcohol is deemed to have been a contributing factor.

  As soon as you are aware of a claim or potential claim situation, take action and contact your insurance representative.

  Tips for Managing Liquor Liability Risks

  1. Create written policies and procedures with meaningful consequences and strictly enforce them. Some useful elements of a policy – that may be required by law – include:

     • Limiting alcohol consumption

     • Requiring that bartenders be experienced and prohibit serving obviously intoxicated persons

     • Encouraging the use of taxi or ride-sharing services and assisting patrons by calling or securing a taxi or ride-sharing service on request

     • Providing reduced/subsidized taxi or hotel rates

     • Encouraging designated-driver programs

     • Reminding guests before and during an event not to drink and drive and of the other options available

     • Having trained doormen/bouncers/spotters watch people leaving and encourage or insist on taxi/ride-sharing use when appropriate

     • Informing guests that intoxicated persons will be put into taxis or a ride-sharing service

  2. Comply with all provincial legislation regarding alcohol, including age of majority rules.

  3. Obtain all proper permits to sell or serve alcohol. In most jurisdiction permits must be displayed.

  4. Ensure servers have completed the required provincial alcohol education programs.

     • Do not serve or sell alcohol to those under the legal drinking age (varies province or territory).

     • Do not serve patrons past the point of intoxication.

     • Train servers on government legislation and regulations pertaining to alcohol.

     • Train servers on the organization’s policies and procedures and enforce compliance. Make sure training is documented.

  5. Implement a mandatory identification policy to verify age.

     • Establish and document the forms of identification that are acceptable

     • Establish and document when identification needs to be shown. For example, require identification from anyone who is not obviously over the age of 30

  6. Display informational material on government policies and legislation related to alcohol.

     • Inform customers that the business will abide by the rules set out by the government

  7. Implement inventory controls over alcohol and measures to prevent theft (e.g., install security cameras, hire additional personnel, etc.).

  8. Establish and document hours to sell or serve alcohol. Check with your local authority to determine minimum standards.

     • If you are renting out a location that you own where renters may consume alcohol, enter into an agreement with the renter that include contractual clauses to protect the owner from losses or damages, or require the renter to carry liquor liability insurance for the event, resulting from the renter’s serving of alcohol. These clauses may or requirements help limit your liabilities. Consult a lawyer for advice on contracts and agreements

  9. Obtain insurance coverage, possibly with higher coverage limits (i.e., higher limits than organizations that do not serve/sell alcohol). Consult your insurance representative.

  10. Comply with provincial regulations and consider implementing a zero tolerance alcohol and drug policy for staff. Do not allow employees and/or volunteers to:

      • Consume alcohol or drugs while working

      • Drink and drive

      • Work if they are or appear intoxicated

  Reporting a Liquor Liability Claim

  1. Record all relevant information surrounding the incident, such as the names and contact information of any witnesses, employees or volunteers who were present or have information about the incident. Complete an incident report that includes all of the relevant details, especially any police involvement. (How to File a Business Insurance Claim)

  2. Refer any discussions with the potential claimant to your insurer. It is wise to tell employees and/ or volunteers that they should not discuss liability with potential claimants and that they should never admit liability.

  3. Investigate potential causes and implement preventive measures.

  ^{Source: Compiled with Canadian Risk Intervention Inc.}

• Slips, trips and falls

  Occupiers liability is another name for the risk of a slip, trip and fall incident. As a business owner, you’re responsible for keeping your property and areas such as stairs, walkways, driveways and parking lots reasonably safe for people who use them. Ensure regular maintenance standards are set and met. Be on the lookout for common hazards and act quickly to fix risks such as:

  • Ice and snow. Use salt/sand and shovel to keep walking surfaces clear within bylaw timeframes and/or local best practices and document when this was done

  • Steps, slopes and gaps. Fix unexpected elevation changes, surface cracks or gaps within your property line and/or report issues on municipally-owned property such as uneven sidewalks

  • Slippery or wet flooring surfaces. Put down a non-slip covering

  • Missing or loose stair handrails. Arrange for repairs or replacement

  • Seasonal debris such as slippery and wet fall leaves. Keep walking paths clear of hazards

  • Lighting. Ensure all areas are adequately lit

• Special events

  Being aware of the many risks involved with hosting or sponsoring special events is important. Be proactive in identifying and managing key risks such as:

  • Legal liability. As an occupier of an owned or rented premise, you and your organization are responsible for the safety of those who attend the premises. Occupiers must protect patrons from all foreseeable harm. You must take extra precautions if:

    • alcohol is served

    • children/minors are in attendance

    • the event includes potentially dangerous or hazardous activities such as fireworks, boating and some sports

    • gambling is involved

    • large crowds are in attendance

  • Injury risks. It’s possible that employees, volunteers and members of the general public who attend may be injured during the special event. Special events often include high-risk activities such as alcohol service, fireworks, children's rides or games, etc.

    • Contact your insurance representative with details about the event. They can determine if your existing coverage is adequate for the event and provide required certificates of insurance.

  • Government liability requirements. Obtain applicable permits from your municipal and/or provincial government to reduce liability risks that relate to violations involving permits. Business insurance doesn’t pay for fines. Health requirements should also be followed. Contact your local government for more information about your business or non-profit’s responsibilities as a special event host.

  • Reputation risks. If situations are not handled well, your business or non-profit’s reputation may be damaged. Being proactive and following risk management best practices can help prevent damage to your brand.

  • Financial risks. Special events hosted by your non-profit often require a large amount of funding. Careful administration and thoughtful risk management can help ensure a successful event as well as align with your financial supporters’ expectations of your non-profit.

  Source: Compiled with Canadian Risk Intervention Inc.

• Sports and recreation

  Due to the nature of risks involved with physical activities sports and recreation programs can be a source of many liabilities including bodily injuries to participants and spectators. Key liabilities to be aware of are:

  1. Occupiers' liability. Occupiers are people who own the premises, have possession of it or have responsibility and control over it. They must keep the premises reasonably safe to prevent injury.

  2. Vicarious liability. An organization may be liable for the negligent actions of its employees and/or volunteers.

  Implementing proactive risk management strategies for sports and recreation events can reduce or mitigate liabilities. Use these risk management tips.

  • Confirm the facility’s design is appropriate for the people who use it. Ensure facilities and equipment are regularly inspected for damage and repaired or replaced as necessary.

    • Develop, follow and document inspection protocols and reporting standards. Ensure qualified inspectors perform regular inspections, in addition to informal inspections. Conduct follow-up inspections of completed repairs.

    • Train inspectors and/or employees and volunteers in inspection standards, use of maintenance tools and safety protocols.

  • Implement employee and volunteer policies and standards such as:

    • criminal background checks for employees and volunteers working with vulnerable populations

    • adequate and continuous training in first aid, coaching as well as organization policies and procedures

    • screening patrons for health limitations that may make it unsafe for them to participate

    • emergency and accident-response procedures. Provide all staff and volunteers with copies of and training in these procedures. Conduct drills to test these procedures

  • Adhere to national, provincial or other governing-body regulations and legislation concerning the conduct of operations.

  • Follow, develop and document safety protocols as well as hazard reporting requirements for employees and volunteers. Ensure that:

    • Facilities and grounds are pre-inspected for obvious hazards and usage areas are constantly maintained. Ensure all equipment meets standards set by the CSA Group. Know and follow manufacturers’ requirements for service intervals and life expectancy of the equipment.

    • Signs are posted that indicate hours of operation, operating procedures, where problems or concerns should be reported and any other relevant information. Use signs – with symbols, French and English text – to warn patrons of any hazards.

    • Users wear appropriate clothing and proper protective equipment.

    • Waivers or informed consent forms are used. Consult with a lawyer to develop legal forms to protect your organization from liabilities. If these forms can’t be used, use a sign-in log to identify potential hazards to which people may be exposed and keep track of users as well as usage times and dates.

    • Determine and follow appropriate supervisor-to-user ratio for different sports and recreation activities.

    • Dangerous hazards are quickly identified and removed. Damaged or defective equipment is repaired or removed and any equipment or facility that fails to meet internal or external standards is immediately shut down.

    • First aid kits, fire extinguishers and other safety equipment is easily accessible and in good condition.

• Directors’ and officers’ liability

  Directors’ and officers’ (D&O) liability insurance coverage is a critical risk-financing tool that is often used to pay legal costs if someone sues your organization for directors’ or officers’ negligence, and can also cover the costs associated with third party liability exposures.

  To mitigate risk and use best practices for management, your organization should:

  1. Provide all directors and officers with awareness training with respect to their duties and obligations and update the training every six months to reflect emerging risks. The Institute of Corporate Directors offers excellent training on these topics.

  2. In particular, an organization should ensure directors are aware of he nature of the business operations:

     • The risks associated with being a director and officer of the organization

     • Statutory and civil liabilities

     • The importance of general financial literacy

     • They have an understanding of the corporate General by law

     • They have an understanding of the scope and nature of both the statutory and corporate indemnities that may be applicable to them

  3. Ensure there is no conflict between the duty owed to the organization and a director’s self-interest, and if one exists to disclose it to the other Directors. Directors should:

     • Avoid outside employment or business that may compromise the organization’s best interests

     • Handle confidential and sensitive information carefully (prevent leaks of information)

     • Follow guidelines on the appropriateness of public statements (i.e., what information can be released and when)

     • Not accept gifts, favours or services relating to company duties.

  4. Ensure directors are aware of the organization’s operations and affairs.

  Organization oversight and risk management

  The organization should:

  1. Implement a financial management policy and establish clear financial reporting guidelines

  2. Properly store confidential materials and sensitive information and do the following:

     • Determine who has access

     • Encrypt all confidential electronic materials

     • Ensure only those with passwords have access and require that passwords be changed frequently

     • Implement firewalls to prevent hackers from accessing information

     • Perform penetration testing once per year to ensure data systems are protected against the latest threats.

  3. Create a human resources policy. Prepare formal job descriptions for all employees and document required experience and training, as well as specific aspects of unacceptable employee performance.

  4. Ensure all employees, visitors, customers, clients and other stakeholders are protected from reasonably anticipated harm.

  5. Establish a formal information reporting system. Directors and officers are accountable for ensuring that the information that they are receiving from management is accurate. In some circumstances directors and officers are entitled to rely in good faith on the accuracy of expert reports and opinions. All decisions of directors should be documented in meeting minutes and any dissenting opinions should be clearly recorded.

  6. Ensure directors work closely with legal representatives in making decisions. Providing full disclosure to counsel, requesting counsel’s advice about the legality of a proposed action, receiving advice that the action would be lawful and following the advice may demonstrate that the director acted with due care.

  7. Implement a whistleblower policy that is communicated to staff and volunteers. Let employees and others know which board member or representative they should inform about any situation they feel the board should be aware of.

  8. Implement a comprehensive director’s indemnification policy that clearly states the rights and obligations of directors and what protection the organization provides to them.

  9. Ensure directors’ and officers’ experience and backgrounds are relevant and diverse.

  10. Develop an incident response system to identify, record and report incidents to appropriate internal officers, staff, or external regulators.

  11. Purchase a comprehensive D&O insurance policy with limits that are adequate to provide a defence and indemnity to the types of claims that may foreseeably arise as a result of the business operations of the Corporation within its current and emerging social economic environment.