It’s not easy in a rough economy to perceive the difference between a business expense and an investment. They both look like the same cash going out the door! But unfortunately, when expense cuts are across the board, the law of unintended consequences can rear its ugly head.


I remember my employer, a major insurance organization, responding to a rough economic period in the late 1970s. They decided not to hire the usual crop of trainees for one year. Not recognizing this was an investment, rather than an expense, cost them dearly in huge staff and skill gaps for about five years.
Risk management, including safety, loss prevention, and mitigation are often put on the chopping block in times like these. For some firms, it feels easy to cut this “soft” stuff: “We’re in good shape. What could go wrong?”
Large company risk managers know the consequences: it costs $7 to $10 to fix a safety or risk management issue, when you could have invested $1 in preventing it up front.
Business Insurance and others regularly report what can happen:
  • Tighter budgets, less attention to safety, and stretched labor can lead to MORE ACCIDENTS
  • Less managerial oversight often encourages ETHICAL PROBLEMS

What You Can Do

Doing more with less is often a necessity, at least for a while. What’s important is not losing sight of your long-term strategies.
  • Discuss problems openly with staff to get understanding, ideas, and buy-in.
  • Get input for effective change implementation: how can you maintain key priorities and the needed oversight to make this work?
  • Everyone’s got to know you’re not downplaying quality products and services, or worker and public safety: talk it up, and walk the talk.
  • Discuss gaps with your risk advisor or insurance broker and other suppliers. Ask them about ways to get – often free – value-added training, risk assessments, loss control inspections, testing, and other help.
  • Remember some investments have intangible benefits – like professional advice that allows management to be more focused and productive, avoids problems, or reduces stress, hassle and distractions.

What’s your Return on Investment?

Insurance rates are starting to climb, and expected to go higher next year. Insurers are clamping down and restricting some coverage. This is definitely not the time for you to have additional claims or look like you’re doing a sloppy job with your risk management and loss prevention basics.
High priority attention and some strategic investment here will pay off over many years to come.
If you have questions or more complex circumstances, don’t hesitate to click reply, or give me a call – | 510-685-3883. There’s never a charge for brainstorming!