Today is a quick reminder to all readers (including me) about risk. As humans, we tend to minimize risk. Below is a chart from a 2012 Harvard Business Review article on risk bias. 

unnamed (Click here to read the full article)

Here are 5 ways to mitigate some of the risks you take when leasing or acquiring real estate:

  1. Avoid the risks you can.
  2. Implement a process to control your risk.
  3. Understand and limit the impact of the ones you can’t avoid.
  4. Take advantage if the risk can be transferred to another party.
  5. Buy insurance on risk as another way to transfer it.
There are tons of risks in buying and leasing office buildings.  Our team is in the risk management business.  Call or email me to help you limit your risks on your next lease.


P.S.- Has anyone ever relieved themselves on your office window? Click here to watch the below video to hear more client stories from Michael Kosta. 

Client Stories
(Having trouble viewing the video? Click here)

5 Ways to Look At Risk

By Reid Rushing | President, Insurance Division



July 7, 2016

Any business owner or home owner should look at Risk Management by asking 5 basic questions about the risks of possible losses:


1. How can I avoid the Risk? Can your risk actually be avoided? When you are thinking about your potential risk of losses, can you actually just avoid the risk all together? For example, if you know cooking with your grill inside will likely cause a fire, then you could choose to cook outside instead. If you can avoid the risk, avoiding it may be better than buying insurance. A simple example of avoiding a possible Liability Loss is: Don’t Drink and Drive.


2. Is the Risk controllable? Are there Risk Management procedures you could implement that will control to potential of a loss? A great example would be safety wear for certain activities such as glasses, gloves, or protective clothing. When you mow your yard, do you wear the proper shoes, gloves, and eye protection to avoid an accident? If you can control the risk, you may not need insurance or as much insurance.


 3. How much of the Risk can you retain? Maybe you can’t avoid the risk, but you can limit it. When you know the risk exists, you can calculate out how much of the loss you can personally retain. But the risk still exists. How much you can retain depends on the Risk, but one way is to raise your deductibles on your insurance policies or pay small claims from your own pockets.




4. Can the Risk be transferred? We can use contracts or help transfer the risk to another party. A good example is when you have a contractor working on your building, asking them to list you as an Additional Insured on their insurance policy will help transfer some of the risk to his insurance carrier. We see this all the time when we rent vehicles. The rental company wants to transfer some of the risk to you by having your sign their contract. This helps protect the rental company’s assets, but it opens you up to a number of possible financial losses.


 5. Can I buy insurance on this Risk? This is the most common form of transferring Risk to another party, but as you can see, it is not the only kind. Insurance is used to help reduce your financial loss when the other forms are just not possible or financially feasible.


As our culture evolves, new risks appear and insurance companies develop new products to address them. Each new risk will need to be addressed by using the questions above. Sometimes, you will be able to something about the risk without purchasing insurance; other times, the risk is so new that you do not know the potential of loss, so you purchase insurance to help protect yourself or your business.




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