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CONCESSION CORNER

CONSIDER THE THREE P’s IN LOSS CONTROL
By Michael B. Beckman, CIC

The terms “risk management” and “loss control” are bandied about almost as often as the term “insurance” in the amusement business, as well as in any other business endeavors. Risk management is an entire discipline, just as accounting is to the financial portion of your enterprise. Risk management techniques can involve very extensive and complicated efforts to identify and manage situations that may be injurious to a company.

Four of the more common techniques used by risk managers are:
AVOIDANCE
SELF-RETENTION
TRANSFER
LOSS CONTROL

Avoidance is somewhat self-explanatory. One example would be to avoid building on a flood plain that has experienced a flood within the past two years. In general, avoidance is to refrain from dangerous activities or events that can put your facility in jeopardy.

Self-retention, or assumption of the risk, merely means that you have identified the maximum possible loss and can assume part or all of that exposure Some of you self-insure some of your smaller buildings and equipment, or carry higher deductibles to keep insurance premiums at a reasonable level.

Transfer usually means to allow another party to assume part of the obligation most commonly in the form of an insurance contract.

Loss control simply means improving your ability to reduce the susceptibility to loss. Building a safe and accessible facility, buying and maintaining excellent equipment, hiring and educating your staff are all loss control techniques that are utilized by most Family Entertainment Centers (FECs) today.

When looking at risk management and loss control for FECs, I like to break the exposure down into three categories, or the “Three P’s”:
PEOPLE
PROPERTY
PUBLIC

People consists of you, your family, your partners, your employees and other key contractors or significant others who are part of your operation.

Property not only includes fixed building, but also all of your equipment and other items at your facility.

The third “P” is the public and the problems inherent in dealing with them in this type of business. This category is the most difficult to control because of changing laws, the changing public expectation of business, recent court decisions, as well as a thousand other items that can affect a business dealing face to face with patrons.

It is very important that an owner or manager of an FEC be able to identify all of these possible exposures so that they can establish a management plan to address the potential loss in each of these areas.

When looking at these three categories, keep in mind that there is overlap, and that one activity may be a profound effect in another category. For example, if your property is somewhat is disarray and not up to proper industry standards, this could create problems for both your employees (and your worker’s compensation carrier, too), as well as create hazards to the public that may result in lawsuits. Additionally, if you do not train and hire the best possible employees, they can damage or steal your property and give you a very weak standing with the public, and again pose potential lawsuits.

It is important that FEC owners address this list with the assistance of their insurance professionals each year to look at various exposures and changes in these exposures. These “Three P’s” must be analyzed on a continual basis and proper safeguards and risk management techniques applied, or the fourth “P” (Profit) will be vary difficult to come by.

ABOUT THE AUTHOR: Michael Beckman, CIC, is a general partner in Wisconsin-based Beckman Insurance Agency. He can be reached at 800-345-2881 or on the worldwide web at: www.beckmaninsurance.com.

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