Loss Management
Categories: Company Management
Loss management is any system a business uses to try to investigate, identify, and prevent losses in the business.
These attempts can be proactive or reactive, and include both accidental and intentional losses (such as theft of and accidental damage to property). It can even be both. For instance, if a company audits its losses, and finds it's losing property in a certain area, it can start installing security in that area.
You run an insurance company with a lot of construction firms as your clients. You find that you get a lot of claims based on accidents involving ladders. Workers at your clients' construction sites, just falling off of ladders, running into ladders, spinning around quickly and hitting co-workers in the head with ladders. It's like a 1920s silent comedy at these work sites. Except you have to pay the claims.
So you put in place a requirement that every client, in order to have insurance, must start showing their workers a ladder safety video you produced (you had to have somewhere to put all the ladder-related bloopers your clients have picked up on security footage).
Your goal is to decrease the number of these claims you have by making people more aware of the danger. In addition, you hope to mitigate any injuries that do occur if a ladder accident happens. In short, you are taking steps to manage your losses.
Or, to put it another way, you're involved in loss management.
Taken broadly, loss management is any system a business uses to try to investigate, identify, and prevent losses in the business. It doesn't have to be insurance companies. The construction companies themselves could try to eliminate ladder accidents, spurred on by the higher rates they have to pay because of all the claims.
The loss management attempts can be proactive or reactive, and include both accidental and intentional losses (such as theft of and accidental damage to property). If the same construction companies discover that a lot of copper tubing disappears on weekends, they might hire a security guard. Another form of loss management.