We can all think of a time where we missed a chance of good luck. Psychologically, a near miss incentivises people in lotteries and gambling. As humans when this happens we tend to reassure ourselves luck is with us or to feel superstitiously that we are being guided.

But what about when we narrowly miss a chance of bad luck? For a moment we feel that gut wrenching moment, then relieved most of us are glad to move on and try to forget about it. In business we can all think of moments where there have been near miss bad accidents, events or potential bad losses. Perhaps we try not to think about them? But these near misses can be helpful as they can give us an insight into the weaknesses of our businesses and give us the opportunity to ensure it doesn’t happen. Sometimes when a bad event eventually does happen, we ask ourselves, ‘why didn’t this happen before?’

Learning from history

The reality is that most events have either happened regularly previously, almost happened previously or might have rarely happened previously. Lessons from near misses often come after losing large amounts of money or after negative events happen with greater regularity, causing our business to function badly and creating large amounts of stress.

Analysis of near misses

Looking at near misses in your business can help you understand potential losses and learn from them in the same way we learn from actual events. Such an approach can help you identify unlikely but possible “black swan” events. The result is it allows you and your business to be prepared for those potential events.

The ‘what if’ factor

The reality is if the loss is not ‘too bad’ we have a tendency to move on, feeling relieved and not think too greatly about the ‘what if’ factor of what about if it had been worse. Whereas if the event is catastrophic to our business or the loss is large we are moved to action.

If we have narrowly missed a negative event occurring repeatedly, we end up thinking like the fortuitous gambler, that luck is on our side. It creates a bias in our thinking, “it will never happen to us”, so that we don’t focus on potential negative events that could occur.

This means that we have then compounded our loss by waiting for a negative event to occur. It will cost our business more time, labour and money to rectify the issue and to recover, whereas preempting a potential problem and being prepared will greatly reduce the impact on your business.

Potential scenarios

Think about potential negative scenarios which might occur in your business. Do you have a plan in place if these should occur? What if there was a serious negligent accident in your workplace, an accusation of bad management, a fire or theft, or a large bad debtor? What are your plans for these scenarios? You can reduce the probability of these events occurring by having thorough workplace practices, and in the eventuality of a negative event occurring you can reduce the impact on your business by having transferred the risk onto an insurer.

If you would like to talk through how to transfer your risk onto an insurer, and how they work together in relation to your business activities, feel free to call Mitchell Insurance Management on 02 6113 0478 or contact us. We would enjoy the opportunity to talk through your potential business risks and propose appropriate solutions that fit and could support your business going forth.

The information contained in this blog provides only a general overview of subjects covered. It is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult Mitchell Insurance Management regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Mitchell Insurance Management cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk.