What is Risk Management?

Risk Management is the systematic process of identifying potential threats to your restaurant, assessing their likelihood and impact, and implementing strategies to prevent losses or minimize their financial consequences.

What You Need to Know

Risk management is your comprehensive approach to protecting your restaurant from all types of losses—not just buying insurance, but actively preventing problems before they occur. This includes everything from daily safety procedures (keeping floors dry, maintaining equipment) to strategic decisions (where to locate your restaurant, what hours to operate).

Effective risk management has four main strategies: avoid the risk entirely (don’t serve pufferfish), reduce the risk (install non-slip flooring), transfer the risk (buy insurance), or retain the risk (accept small deductibles).

For restaurants, risk management combines safety protocols, employee training, equipment maintenance, security measures, food safety programs, and appropriate insurance coverage.

Why It Matters for Restaurant Owners

Insurance is just one part of risk management—prevention is always cheaper than paying claims. Restaurants with strong risk management programs experience 40-60% fewer insurance claims, which directly translates to lower premiums through better experience modification rates.

Beyond cost savings, good risk management prevents the operational disruptions that claims cause—lawsuits distract from running your business, injuries harm employee morale, and food safety incidents destroy your reputation.

Implement documented safety programs, conduct regular training, maintain detailed records of all risk management activities, and share this documentation with your insurer to demonstrate your commitment. Insurers reward documented risk management with better rates and more favorable coverage terms.

Think of every dollar spent on risk management as saving three to five dollars in claims and insurance costs.