11d • General discussion
The 3 Risk Pillars Every Business Needs To Be Aware Of
When I work with a business, I'm always mapping the same three categories:
Pillar 1: Compliance Risk
Pillar 2: Workers Compensation Risk
Pillar 3: Operational Risk
They're not separate problems. They're interconnected. But they require different strategies.
🔍PILLAR 1: COMPLIANCE RISK
The Problem: You're not compliant, you get cited, you pay penalties, your insurance goes up.
What Most Business Owners Don't Understand: OSHA rewrote their penalty structure in 2025. Small businesses (≤25 employees) can now reduce penalties by 70% if they know the rules, but most business owners don't know the rules exist, so they get hit with a $16,550 penalty when they could've paid $2,400 if they'd known.
Real Example:
- A smaller manufacturing shop gets cited for fall protection violations
- Manager thinks: "We're getting fined $16,550. This is bad."
- What they don't know: They qualify for 70% size reduction + 15% quick-fix bonus + 20% clean history credit = 85% total reduction
- Actual penalty: ~$2,483
The difference: $14,067 they didn't need to lose.
Compliance isn't just about penalties. It's about being audit-ready before inspectors show up, understanding which violations exist in YOUR operation, having a framework to fix them before they become problems, and knowing which compliance areas require expertise vs. which you can DIY
These first few weeks, we're breaking down OSHA violations, compliance frameworks, audit systems, and how to self-inspect before the government does.
💔PILLAR 2: WORKERS COMPENSATION RISK
The Problem: One bad year of claims tanks your experience mod, and you're overpaying premiums for 3+ years.
What Most Business Owners Don't Understand: Your workers' comp premium is NOT just based on your payroll and job classification. It's based on your Experience Modification Rate (EMR), which is calculated from your claim history. One $50,000 claim can increase your premium by 15-25% for multiple years, and three $20,000 claims hurt you more than one $60,000 claim (this is the part that confuses everyone).
Real Example:
- A construction company has $800K payroll, "standard" EMR = 1.0
- Year 1: One serious injury, $75K claim filed
- Year 2-4: EMR jumps to 1.35 (35% premium increase)
- They're now paying an extra $15,000-$20,000 per year because of one claim
- Across 3 years: $45,000-$60,000 in extra costs that could've been avoided with proper claims management
Most business owners don't actively manage their claims. They let insurance handle it. And insurance is incentivized to settle quickly, not to manage YOUR cost long-term.
In weeks 5-8, We're covering how EMR is calculated, claim management strategies, recovery techniques, and how to get your mod back down once it's gone up.
🏗️PILLAR 3: OPERATIONAL RISK
The Problem: You're focused on safety and compliance, but missing blind spots that could crater your business.
What Most Business Owners Don't Understand: Operational risk is the stuff that doesn't show up on insurance policies until it's too late.
- What happens if your #1 vendor disappears?
- What's your cyber exposure if a client's data gets breached through your systems?
- Do your subcontractors actually carry the insurance they claim to?
- What happens to your business if you get hit with a lawsuit from a vendor or client?
- Do you have supply chain dependencies that could shut you down?
These aren't "nice to think about." They're existential threats.
Real Example:
- Service company depends on one logistics vendor
- Vendor goes out of business with 3 days notice
- Company loses 40% of revenue for 6 weeks while scrambling for alternatives
- Could've been prevented with a 2-page vendor risk assessment
In weeks 9-12, we're mapping operational vulnerabilities, supply chain dependencies, cyber exposure, vendor management, and business continuity planning.
"But Dallas! Why are we going in that order? Why can't you give me everything all at once?"
Great question, and there is a method to my madness here. We go Compliance → Workers Comp → Operational Risk because:
- Compliance is the foundation (you can't protect yourself if you're violating laws)
- Workers Comp is the biggest cost (this is where most premium surprises happen)
- Operational Risk is the blind spot (this is what stops most people, so we save it last)
By the time we wrap up this cycle and move on to the next, you'll have a more full understanding of what these pillars are and how they sync up with your business.
2
1 comment
The 3 Risk Pillars Every Business Needs To Be Aware Of
powered by
skool.com/risk-management-tips-7690
Free community for business owners who want to simplify compliance, reduce risk exposure, and protect their profits. No BS. Pure strategy.
Suggested communities
Powered by