What Does Risk Identification Mean?
Risk identification is the means by which a company’s management attempts to pinpoint risks in their business operations. This allows them to take steps to prevent these risks or create relevant solutions in case they do happen, such as purchasing adequate insurance coverage.
Insuranceopedia Explains Risk Identification
An insurance company might work directly with a business organization to help them with the risk identification process. The business may allow the insurer to assess their business operations or inspect their workplace in order to locate any actual or potential risks. The insurer will then suggest improvements aimed at risk reduction, such as better safety standards.
The identified risks are analyzed according to their likelihood of occurring, their predicted frequency, and the estimated cost of a loss.