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loss prevention and risk management

loss prevention and risk management. Latarski. Overview. Define the principles of risk management that apply to the retail industry. Define steps for a retail loss-prevention program Explain the security systems you incorporated in your loss prevention analysis.

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loss prevention and risk management

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  1. loss prevention and risk management Latarski

  2. Overview • Define the principles of risk management that apply to the retail industry. • Define steps for a retail loss-prevention program • Explain the security systems you incorporated in your loss prevention analysis. • Explain the security systems you incorporated in your loss prevention analysis.

  3. Introduction Risk Management is not an insurance transaction. (Mandaji, n/a). • Our objective is to place Insurance in a wider perspective called Risk Management and to discuss how Organizations tend to deal with the Risk factor (Mandaji, n/a)..

  4. Risk Management Essentially, Risk Management involves three levels: • Identify exposures and assess loss potentials; • Choose the most efficient combination of methods of control and loss financing; developing and executing its implementation; • Continually revise this plan after putting it into effect (organizations change often) (Mandaji, n/a).

  5. Risk Management Balance and efficiency in carrying out each of the aforementioned levels are fundamental for a successful risk management plan. • In our contribution to the discussion, we will concentrate on the aspects related to the second level, that is, loss financing, with special dedication to preventing such losses (Mandaji, n/a)..

  6. Loss Control One of the ways of systematizing this organization is by perfecting the efficiency of the controls is by analyzing the issues, breaking them up into categories: • Risk Avoidance • Loss Prevention • Loss Reduction • Financing remaining losses • (Mandaji, n/a).

  7. 1. Risk Avoidance In certain situations, the best way to handle exposures is to avoid the possibility for the loss to occur, eliminating the potential for loss. In practice, this means limiting exposure. For example, governments avoid investing in certain countries and businesses prefer avoiding risks related to property confiscation which would cause profit losses. People sometimes choose their careers based on avoiding jobs that involve high possibilities for sickness, injury, or death. Others avoid professions where the chances of professional success are slim.  

  8. 1. Risk Avoidance This reasoning runs up against one fact: some risks are inevitable... In reality, most are. In other words, most risks can be reduced, but not eliminated. With that in mind, if humanity were to have dealt with risks by always avoiding exposure, perhaps we would still be in the developmental stage of the Middle Ages.

  9. 2. Loss Prevention A successful loss prevention plan contributes to the reduction of loss frequency. • To the extent that the benefits outweigh the costs (and this can easily be seen when the costs and benefits are calculated), organizations should use loss prevention to handle all their exposures, whether assumed or transferred to the insurers (Mandaji, n/a)..

  10. 2. Loss Prevention • Basic Rule:Whenthereisthe chance forloss, theresponsible managers shouldconsiderLossPreventionmeasureswithalternativesfordealingwiththeproblem(Mandaji, n/a)..

  11. 4. Risk Financing Evenwhengoodlosspreventionprograms are followed, unfortunately, accidents do happen. Riskfinancingpolicies determine underwhichcircumstancescostswill be born and bywhom. Themainriskmanagement and control modelstendtoclassifyfinancingformsintocategories: • Assumption: assumedamages as theyoccur, withoutestablishing reserve funds; • Self-insuranceorfinancedretention • Insurance(Mandaji, n/a).

  12. 4. Risk Financing Decisions related to who will bear the losses and when they will do so depend on organization policies, which should consider parameters such as: • Frequency and severity; • Greatest damages possible; • Accumulation of risks; • Mass or amount of risk exposure; • Financial capacity, • Organization objectives, such as longevity, etc. (Mandaji, n/a).

  13. Reviewing the stages of Risk Management • Identify exposures and assess loss potentials. • Combine methods of control and loss financing. • RiskAvoidance • LossPrevention • LossReduction • Financingremaininglosses • Continually revise the plan • (Mandaji, n/a).

  14. Some benefits of Risk Management • First of all, lives saved; • Goods saved; • Aduquately contracted insurance; • Risk reduction and cost reduction (Loss Control) • Retained risk awareness; • Continuity of the organization and its objectives; • Motivated workers; • Community well-being (Mandaji, n/a).

  15. Bibliography DORFMAN, Mark S. (2008). Introduction to risk management and insurance [Introducción a la gestión de riesgos y seguros]. 9th ed. USA: Pearson Prentice Hall. HOPE, Warren T. (2002). Introdução ao gerenciamento de riscos [Introducción a la gestión de riesgos]. Tradução de Gustavo Adolfo Araujo Caldas. Rio de Janeiro: Funenseg VAUGHAN, Emmett J.; VAUGHAN, Therese M. (2003). Fundamentals of risk and insurance [principios fundamentales de riesgos y seguros]. 9th ed. USA: John Wiley & Sons

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