OUTLOOK MONEY
RISKY BUSINESS Risk management strategies for small businesses
R
isks are a necessary and expected part of running a business. If you tried to operate your pharmacy without incurring any
risks, you would never grow or make a profit.
"One thing people don’t understand when they get into a
business is that it’s nothing but one big gamble. If going into business were a sure thing, everybody would do it," said Brenda Wells, Robert F. Bird Distinguished Professor and director of the risk management and insurance program at East Carolina University. "But the benefits of taking risks are you can make a nice return and you can build a nice business for yourself."
While risks are part and parcel with running a pharmacy, a
process called risk management balances risks with rewards and builds a more durable business. IDENTIFYING RISKS Risk management boils down to five steps. The first step, identifying potential risks, is often the biggest hurdle to clear. "There are so many places you can find risks," Wells said.
Start by looking at your income statement and balance sheet.
Wells pointed out the Tylenol murders of the 1980s when someone snuck cyanide capsules into Tylenol bottles in pharmacies, resulting in the deaths of seven people. "Before that, there was never even concern that something like that would happen. Then, all of a sudden, we have to seal bottles with foil and then seal the lid onto the bottle and seal the box up," she said. "New risks are always popping up. You can’t just do a risk assessment and say, ′Okay, I’m done.′ You have to constantly be looking for new risks that come into play."
"The balance sheet shows assets—things of value—so it’s a great place to start your risk identification process," she explained. "The income statement should indicate where your revenues are coming from, and ultimately those assets need to be protected, too."
Take inventory of the kinds of losses you’ve experienced in
the past. Wells said, "If your employees keep straining their backs lifting things, you’ll probably need to implement some prevention techniques to get that under control, because you could go bankrupt paying those workers’ comp premiums."
Perform a physical inspection of your pharmacy to identify
risky areas. This includes areas where patients are likely to injure themselves or areas where you could accidentally reveal private health information.
In a busy environment like a pharmacy, it’s especially important
to look for risks associated with your workflow behind the counter. "It only takes the phone ringing while you’re filling a prescription to mess up," Wells said. "Recognize that these kinds of things can happen to anybody at any time."
Your work isn’t done after you’ve completed a single risk
management assessment, because the risks to your pharmacy are always changing. Sometimes, you can’t recognize a risk until after the damage has already been done.
30
pbahealth.com/elements
5 STEPS OF RISK MANAGEMENT STEP 1: Identify Potential Risks Take a look at your pharmacy’s finances and physical layout to identify areas of potential loss exposure. STEP 2: Analyze Risks Determine which risks could cause severe loss and which could cause minor loss. STEP 3: Determine a Plan Decide which tools to use to prevent and reduce losses, like safety improvements or insurance policies. STEP 4: Implement Your Plan Put your loss control strategy in place by buying the insurance coverage you need or making improvements in the store. STEP 5: Review Continuously assess your risk management plan and look for opportunities to improve it.
