Your Loss Control Plan (Part 2)


Loss Control to Major Tom . . .

In Part 1 we reviewed inherent risk and the duty of a business to engage in reasonable diligence or due diligence in the conduct of daily operations. Not all risks are apparent. Every business faces risks that can be hidden. Reasonable diligence is about the management of risks. In business one effective tool to manage risk is a Loss Control Plan.

A good Loss Control Plan goes beyond a simple checklist. Some key elements would include:

Safety Policy — sets the expectation that it is the responsibility of all personnel to create and maintain a safe work environment. The Safety Policy should include a Safety Policy Statement:

  • Safety and health in our company must be a part of every operation. Without question, it is every employee’s responsibility at all levels.
  • We will maintain a safety and health program conforming to the best practices of organizations of this type. To be successful, such a program must embody the proper attitudes toward injury and illness prevention on the part of supervisors and employees. It also requires cooperation in all safety and health matters, not only between supervisors and employees, but also between employees and their co-workers. Only through such a cooperative effort can an effective safety and health program be established and preserved.
  • The safety and health of every employee is a high priority. Management accepts responsibility for providing a safe working environment and employees are expected to take responsibility for performing work in accordance with safe standards and practices. Safety and health will only be achieved through teamwork.  Everyone must join together in promoting safety and health and taking every reasonable measure to assure safe working conditions in the company. OSHA

The next part of the Loss Control Plan should detail everyone’s (Management, Supervisor’s and Employees’) responsibilities in meeting these goals. Additional topics should include:

• New Employee Orientation
• Training
• Safety Meetings
• Incident Reporting, Investigation & Analysis
• Standards & Procedures
• General Safety Information

Depending on the type of operations the following areas of concern may need to be covered:

• Hazard Communication Program
• Safety Data Sheets  (SDS)
• Lockout/Tagout Program
• Hearing Conservation
• Confined Space

Start With a Template

There are many templates (models or examples) available from sources as your insurance company and/or industry associations that can help in putting together a Loss Control Plan and all of its associated components.

Other Loss Control Planning tips:

Get inputs from staff, especially line staff. They know the risks.

Review your Loss Control Plan, especially in times of change.

Contact your insurance company for assistance. Many insurance companies have a loss control department. (It may be known as risk management, risk engineering, or a number of other names.) Usually there are no charge or fees for this help.

Thank you for reading this.

Your Loss Control Plan (Part 1)


A successful dairy farmer buys a tractor-trailer for his son-in-law to haul steel. Nothing unusual about that. Then the son-in-law breaks his arm. He can’t drive, but knows a friend who can. On the friend’s first trip he brakes hard, loses a steel coil and the coil takes the cab off of the truck. No one is hurt, but the trucking venture closes.

A potato farmer buys a tractor-trailer to make deliveries to a major city about 250 miles away. His son will drive the truck and is advised to get some experience. “What for?” he responds. “Any idiot can drive a truck.” On his first trip, in an exit ramp, the newly-minted driver rolls the fully loaded truck on its side. The truck is damaged and later sold after it was repaired. Fortunately, no one was hurt.

An 18 year old tractor-trailer driver takes a friend with him. Seven miles from the origin of the trip, he shows off how fast he can take an S curve around the “devil’s punchbowl,” a naturally occurring sinkhole. He rolls the truck in the curve and his friend is fatally injured.

Inherent Risk

All of the above disasters happened to people I know. All of these stories are examples of the inherent risk in trucking operations.

Inherent risk — the probability of loss arising out of circumstances or existing in an environment, in the absence of any action to control or modify the circumstances.

Every business has its share of risk. Without risk there is no reward. Most businesses share their risk with a risk partner — their insurance company. They have no choice. It’s the law.

The agreement to share risk is commonly known as an insurance policy. It is a contract. Its purpose is to protect the assets of the insured.

Being a contract, both parties to the contract have certain duties and obligations. One of the presumptions of any contract is that the parties act in good faith — that is honestly and fairly, so both can receive the benefits of the agreement.

Another presumption (at least on part of the insurance company) is that risks are controlled — reasonable efforts are made to prevent losses and/or harm to others. The contract language may call for commercially reasonable efforts, reasonable best efforts,  every effort, or even commercially reasonable and diligent efforts in this area.

What does this mean?

The standard of care would be reasonable diligence (due diligence).

— It means the care and attention that is expected from and is ordinarily exercised by a reasonable and prudent person under the circumstances.

It’s no coincidence that one legal definition of reasonable diligence arose from lawsuits involving transportation . . .

“A fair, proper, and due degree of care and activity, measured with reference to the particular circumstances; such diligence, care, or attention as might be expected from a man of ordinary prudence and activity.”

Due diligence in the prevention of losses (loss control) can mean to your business, depending on the level of risks involved, having a loss control plan.

To be continued . . .

Thank you for reading Part 1.