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Risk Management on the Home Front
Risk management professionals help a company identify potential losses and address them before they happen. Good risk management can help companies save on their insurance premiums, reduce claims and improve the company’s image with consumers. The basics of risk management can be applied to your home as well, saving you money and helping you avoid the expense and the hassle of a catastrophe.
The Chicago area has endured an unusual number of heavy rainstorms in the last several months, and the most recent – which hit last month – reinforced the importance of thinking ahead. A lot of Chicago area homeowners found themselves wishing they had a backup sump pump or even a generator, as they watched the water come into their basements.
Risk management begins with identifying potential risks, and considering ways to mitigate those risks. Sometimes the approach is simple: You minimize the risk of you or someone else slipping on your sidewalk by keeping the sidewalk clear of snow, leaves and debris, for example.
You can see how risk management works in more complex cases by looking at potential basement flooding from backup. First, consider how big your risk is. Does your basement flood often? What kind of flood control system do you have? Is it in good repair? If your basement were to flood, what could you lose?
Next, conduct a cost/benefit analysis, There are many options for reducing the risk of basement flooding, ranging from an extra sump pump with a battery backup to a gas-fired generator that kicks in automatically when the power goes out. Your decision on how much to spend probably will be based on how much you stand to lose. For example, if you have very little in your basement, you might decide to get a basic backup system, raise your appliances off the floor, and be prepared to clean up the mess if these systems fail. On the other hand, if you have a finished basement with a workout area and a home theater, you probably want to have a more elaborate backup system.
It is critical to think about these issues before catastrophe strikes, though. You don’t want to be running to Menards and fighting for the last generator as the water is filling your basement.
Risk management principles can be applied in situations other than basement flooding, of course. For example, do you have a backup for your burglar alarm? Do you keep a copy of your important papers in a safe place outside your home? Do you keep valuable jewelry or other items in a home safe or safe-deposit box? And does someone other than you know where to find the combination to the safe or the key to the safe-deposit box?
By thinking ahead about eliminating or controlling risks, and by making sure you have a backup plan, you can help control your insurance costs and save yourself the time, effort and expense of dealing with a problem after it happens.
We can help you evaluate your risk management needs. Just give us a call at 847-572-0800 or email me at firstname.lastname@example.org.