Running a daycare center is a big responsibility. It can also of course be a source of immense pleasure, but as you know, there are quite a few things you need to worry about on a regular basis. That’s why it’s important to consider a risk management plan for daycare centers when you’re getting started.
What such a plan does, is help you identify potential risks in your place of work and figure out how to deal with them. These include risks to the staff, the facilities, your equipment, and the children themselves. Risk management for child care centers in other words is an essential part of running a smart business. And it's also key to your long-term success.
Why do daycare centers need a risk management plan?
There are a number of reasons why you need risk management in childcare. The main reason is that a risk management plan, much like business insurance, is a protective measure that pretty much all businesses need. So whether you’re running a hair salon, construction company, or in your case childcare facility, this type of plan makes good business sense.
In addition to protecting your business financially, a risk management plan for daycare centers also protects the health and safety of both the children and staff. And since you’re dealing with children and their parents – a sensitive and somewhat vulnerable customer-base – you need to be extra careful. Plus, if you’ve done proper risk assessment, you may be able to leverage that to save on your insurance premiums.
5 Areas to Consider When You Begin Your Risk Management Plan
A risk management plan begins by identifying and listing the risks your business faces. Once you’ve spelled them out, you will also need to outline how you will lower the risk, and what you will do if the risk comes to fruition.
There are a number of different types of risks that any business may face. You should consider all of them as a daycare owner, as each applies to your business in varying degrees.
- Strategic risk – As a daycare operator this is probably the least important area to consider, unless you have dreams of building a franchise. That being said, having a good business plan to follow can help you out here, guiding you to reach your annual business goals.
- Financial risk – If you’ve taken out loans to purchase your property or finance a renovation this is particularly pertinent. But it’s also more basic than that, as you assess your ability and the risks involved in generating enough revenue to cover your daycare’s operational expenses.
- Operational risk – Failed procedures, inadequate systems, poor policies, employee errors, and pretty much any incident that disrupts “business as usual” fit under the category of operational risk.
- Compliance risk – There are minimum standards for child care centers, usually mandated by the law. Not meeting them can put you out of business quickly.
- Reputation risk – If you have a compliance mishap or any other mistake your reputation is at risk. And as you know, in a business like daycare, the word spreads quickly, and powerfully.
If all that risk sounds scary, it should. To an extent that is. Risk management in childcare, after all, is serious business. So you should be taking it seriously. That being said, with proper attention to detail you should be able to manage your risks in kind.
What Does a Typical Risk Management Plan Include?
While the rules aren’t 100% written in stone, there are a number of elements that most risk management plans cover. As briefly mentioned above this begins by documenting all the potential hazards your business may face.
Once you’ve listed all the potential hazards it’s time for the actual plan. And this is basically assigning strategies to the different factors. These are essentially:
- Risk avoidance – If you can eliminate the hazard then this is a great and easy answer.
- Mitigation or prevention – These are steps you can take to prevent the mistake from happening or losses from occurring. If that's not possible, you want to find ways to lessen their potential impact.
- Risk transfer – This is where insurance comes in as well as documents like waivers and release forms.
- Risk retention – Some risks simply can’t be eliminated or reduced. That means sometimes the only plan is to do nothing at all, and simply accept reality.
Additional Must-Haves for Daycare Centers
The basics of a risk management plan for daycare centers really aren’t much different than any other small business. The criteria you have to consider, however, are.
For example, you need to think about the likelihood of injury or illness double-fold. That is, in terms of your staff as well as the kids. You have power outages, extreme weather, and maintenance to consider. There are toys and equipment, the risk of unattended children, chemical hazards like cleaning materials, drug and medication administration, entrance/exit security, and the potential for choking of course. Even things like what happens when sand is thrown around are things you need to consider – and how you’re going to reduce that risk. In other words, as a business with far-reaching responsibility you have a lot of factors to take into account. Plus, you've got a lot of scenarios to work through. And since we’re talking about children, the stakes are higher than elsewhere.
What Insurance Would a Daycare Need?
Now that we’ve addressed the question what is a risk assessment in childcare and how to come up with a plan, let’s move on to insurance. Because while planning is great, you still need an added layer of protection and that’s what daycare insurance is for.
In addition to liability insurance, you should also be considering other forms of insurance, based on your particular daycare business. For example, if you’re running your business out of your home you may need to add it to your general home insurance policy. Similarly, if you’re running your daycare out of a rented facility, you should definitely consider property insurance. If you have workers, which you likely do, you’ll need to pay their workers’ comp. And since you’re all around sick kids so often, you may want to consider health insurance as a good investment as well.
Bottom-line on Risk Management Plan for Daycare Centers
There is risk involved in any business, and daycare centers are no exception. In fact, due to the nature of the business, you may actually face more risks than others. Still, if you plan right – with a good risk management plan in place as well as the right insurance – you should be able to minimize those risks. Accidents and mistakes will happen, but if you cover your bases, your business should be able to overcome them. And in turn, your daycare center will be on better footing to thrive.