From the course: Protecting Profitability by Reducing Financial Risk

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Analyzing impact

Analyzing impact

From the course: Protecting Profitability by Reducing Financial Risk

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Analyzing impact

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- If you've made the commitment to identify your business exposures, then it makes sense to do something with that information. That's where the next step in the process called analysis comes in. While this might sound onerous, it's not if you keep to the strategy of one, two, three. There are three areas for you to focus on when it comes to analyzing your risk exposures. They are frequency, severity, and probability. Frequency is the analysis of how often something bad can happen to you. For example, if you own a restaurant, you're assured that over the course of a 12 month period, you'll have a frequency of slips and falls. This is normal for any operation with heavy foot traffic. The analysis here is to check your history of slips and falls and determine what a normal amount over the course of a year is. You can then determine the cost for every fall. Factors in that cost include the time taken by staff to deal with it, medical expenses, and stoppage of operations, and financial…

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