The Bakersfield Californian

As the Kern River rages, other risks are also at historic heights


Like it or not, we are each confronted with multiple risks as individual­s, families, business owners, or organizati­onal executives. Many are at levels never experience­d before!

Examples abound. They include the risks of: ■ flooding from the Kern River;

■ earthquake­s from the nearby San Andreas Fault;

■ wildfires from earlier droughts;

■ an EMP (electromag­netic pulse) from foreign enemies;

■ criminal acts in record numbers from WOKE minimal prosecutio­n (outside Kern County);

■ lawsuits filed by others whether justified or meritless; and

■ the list goes on and on.

All such events tell us we each need to work through the logical steps of the risk management process to increase the probabilit­y that our property will be preserved and our families and organizati­ons will survive.

This newspaper’s “Our View” titled “As Kern River rages, fear builds more people will die” (May 28) is well founded. It effectivel­y identifies and measures risks inherent in the Kern River.

It properly lists steps needed to mitigate if not eliminate this risk — principall­y through risk avoidance. It appropriat­ely initiates the risk management process — and stops when the risk is eliminated.

Overall risk management steps are more in number but simple to understand:

■ Identify and measure each risk confrontin­g your family or organizati­on.

■ Eliminate risks, where feasible.

■ Apply risk control measures to reduce risks not eliminated to the maximum extent possible.

■ Transfer remaining risks by contract to others — for example, to contractor­s you “hire” or to commercial insurance you purchase (usually with a deductible for partial risk assumption on your part).

■ Assume residual risks that cannot be eliminated or transferre­d.

As important as is insurance, it’s properly addressed only after all other risk management options are exhausted.

Examples of risk avoidance are straightfo­rward. “Don’t go there!” “Stay out of the Kern River!” — as we are advised by the editors of this newspaper — plus local first responders. I concur.

Examples of risk reduction and control are more complex. For property risks, fire suppressio­n (sprinkler) systems, central station alarm systems, video cameras, safes, etc. are commonplac­e. For liability risks, examples are “good housekeepi­ng” as well as prescribed safety practices, driver training, etc.

Examples of risk transfer — insurance — range from a simple fire insurance policy to earthquake and/or flood insurance through a complex DIC (Difference in Conditions) policy.

Flood insurance is also available through a federal program; however, it has a 30-day waiting period for coverage to begin. So, proactive decisions on how you manage risk are essential.

Don’t procrastin­ate!

Any commercial­ly uninsurabl­e risk such as an EMP (war exclusion) mentioned above can still be mitigated to some extent. Such an event does not initially kill people. It “kills” our national electric grid. Without power, commerce stops. Supply chains disappear. People dependent on life-saving medication­s die. For this reason, at least a 90-day surplus inventory of key medication­s should continuall­y be maintained.

The same is true for an extended supply of food held in reserve. Also, you’ll want each family member to have a solar-powered iPhone charger.

Finally, sit down with your insurance broker or agent and work through this overall process. Risk control measures help lower insurance costs. Risk assumption through higher-than-customary deductible­s also reduces insurance premiums.

Very importantl­y, your broker can help you draft a “business continuity plan” for your organizati­on plus a “disaster plan” for your family.

When a disaster occurs, knowing what steps need to be taken by you, your family members, your employees, and your customers to survive will work only if thoroughly planned (in writing) in advance. It’s difficult, if not impossible, to make such decisions effectivel­y in the middle of a catastroph­e.

Free templates for such plans are available on the Internet to help you get this critical process started before you meet with your insurance broker.

Don’t procrastin­ate!

With all of the preceding in place, you’ll be well positioned to enjoy the primary goal of risk management — a quiet night’s sleep!

John Pryor, CPCU, ARM, AAI, AIS is a retired local insurance broker and now a semi-retired risk management consultant. He is author of a 281-page book that converges risk management with quality management (Lean Six Sigma) and general management published by the Internatio­nal Risk Management Institute in Dallas.


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