If you are bidding on a project and find out that they owe their previous lawn maintenance contractor over 5,000 dollars and have a reputation for burning bridges with their landscapers before that, would you still try to pick up that client?

You may answer that question ‘no’ or ‘yes’ or ‘yes with certain conditions’. No matter which way you answer it, you are weighing the risks of that type of a client in your mind against the risks of the amount of profit you could receive by doing the work. For this article, the term ‘risk’ is defined as uncertainty about outcomes that can be either negative or positive.

More than likely, if you chose to still bid on that project and service the client, then you would take measures to reduce the risk that this client would avoid paying you for the work you completed. The same is true for all of your clients and all of the risks you face as a business owner. By using an enclosed trailer instead of an open trailer, you are forfeiting some of your employee’s time on each jobsite towards getting out their equipment. But you are reducing the risk that your equipment will be stolen, so your business chooses to accept the tradeoff or not accept it.

This is the essence of controlling risks.

Risk control is a conscious act or decision not to act that reduces the frequency and severity of losses or makes losses more predictable. Risk control techniques prevent losses, reduce the severity of losses, and speed recovery following a loss. Risk control techniques can be categorized into one of six broad categories:

• 1. Avoidance – involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.
• 2. Loss Prevention – a risk control technique that reduces the frequency of a particular loss.
• 3. Loss Reduction – reduces the severity of a particular loss.
• 4. Separation – disperses a particular asset or activity as part of the organization’s working resources.
• 5. Duplication – uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve.
• 6. Diversification – spreads loss exposures over numerous projects, products, markets, or regions.

As your business engages in risk control, it is important to keep in mind the main goals of controlling risks. These goals are as follows:

• - Implement effective and efficient risk control measures
• - Comply with legal requirements
• - Promote life safety
• - Ensure business continuity

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under (1) Insurance, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: