In Columbus, Indiana, one engineering business dodged a potentially devastating fire, thanks to the owner's surveillance app. According to a report by The Indy Channel, one of the machines caught fire and sent a jumbled status update email to Mike Noblitt, the business owner. The machine sending an email wasn't the confusing part – they are automated to do just that – but when he couldn't make heads or tails of the message, he knew something wasn't right.
After checking out the surveillance app, which streams a live feed from the industrial building's security cameras, Noblitt saw the issue: flames and smoke shooting above the machine. He immediately called the fire department and met the responders at the scene.
Because of Noblitt's risk management planning and fast thinking…
- The damage to the machines was minimal.
- There was no damage to the building's structure.
- Firefighters responded within minutes.
- There was no business interruption.
Let's take a few pages out of Noblitt's book and see how appropriate risk management measures can cut costs in the long run.
A Little Forethought = Lots of Money Saved
First of all, let's establish what we mean when we talk about "risk management." In the insurance world, this refers to any steps that…
- Identify possible situations that could cause financial loss (e.g., a fire).
- Mitigate those losses.
In the example above, Noblitt was thinking about the future of his business when he invested in security cameras and the surveillance app. Security cameras can lessen the financial impact of certain risks by…
- Deterring thieves or vandals.
- Recording fires or workplace accidents (which can come in handy for filing insurance claims).
Noblitt's cameras saved his entire business from burning to the ground because he was fortunate enough to check the video footage in time. Though the security system cost him some capital upfront, that expense pales in comparison to how much it would cost to repair the fire-damaged building and its contents.
It's worth noting that high-tech gadgets don't guarantee that your business won't face a devastating loss. Thieves could still break into your shop and a fire could still burn down your building. After all, you can't compulsively stare at your surveillance feed while you're away from your business – it would drive you mad.
That's why insurance is usually the last prong of any full-fledged risk management plan. Your preventative measures may reduce the extent of the damage, but no strategy can completely eliminate your risk exposure (not even insurance). However, insurance shields your business from the resulting costs when a covered event does happen so you don't have to pay out of pocket to keep your business afloat. For example, here's what the following policies can do:
- Property Insurance pays for repair or replacement costs when a fire damages your commercial property.
- General Liability Insurance covers legal expenses when a customer or nonemployee is hurt on your property and sues your business over the injury.
- Workers' Compensation Insurance pays for medical expenses when your employees are injured at work.
As a final note, bear in mind that the best risk management plans include both preventative strategies and insurance protection. For more prevention tips, check out our risk management blog series.