What is Risk Management?
Brian Rawlings, the vice president for FITLIFE, shares the ins and outs of risk management considerations for club owners.
Risk management is a term that business owners hear almost every day. We think about it when deciding on insurance coverage, managing our equipment, keeping our members safe and hosting our events. But what specifically is risk management, and what does it mean for club owners?
There are various definitions, but the Corporate Finance Institute defines it as, “The identification, analysis and response to risk factors that form part of the life of a business.” Essentially, risk management is the art of identifying risk before it becomes a problem, determining how to manage it and implementing a mitigation strategy.
Typically, risk management for clubs and gyms entails identifying the potential problem areas in a business. Is equipment getting older or breaking down? Are there areas of a club that need a deeper cleaning than others? Are there potential staffing problems due to labor shortages? Risks need to be identified and understood before they can be properly managed.
Many business owners approach risk management on a case-by-case basis. Equipment is repaired when it breaks, member concerns are addressed as they arise and staffing challenges are handled day by day. Unfortunately, a reactive approach that isn’t guided by a more formal risk mitigation plan can lead to safety oversights, missed maintenance, ill-prepared staff and other problems that could have been avoided.
One of the best steps a business owner can take to correct these oversights is to include daily risk management in the responsibilities of a senior staff member. Technically, everyone employed at a club should be involved in risk management, even if they are just keeping an eye out for potential hazards. However, a manager should be appointed to assess the potential risks facing a club regularly, systematically and methodically to develop a plan to combat them daily.
A good risk manager will do more than walk the floor and inspect equipment. They will follow a step-by-step process to identify potential risk exposures at the club and develop solutions to manage them. Tasks include:
Reviewing maintenance logs for patterns or irregularities in the facility or equipment.
Meeting with team members to identify training opportunities and assess morale.
Develop step-by-step processes for managing an emergency.
Proposing revisions to policies that may be failing to address and adequately manage risks.
By appointing a designated leader responsible for risk management, clubs and gyms will have someone who is setting aside part of their day to look out for the best interests and safety of the members, teams and business. In addition, consider working with your insurer to develop a risk management strategy and potentially prevent a claim before it happens. By devoting time and attention to managing risks, club owners and operators can reduce the likelihood of a costly insurance claim and address potential problems before they occur.