The risk management component is of course very important. A large disaster can threaten the survival of the property economically. The records kept are a part of this, as any legal action taken by others can be thwarted if there are detailed records that refute their claims.
A part of risk management is determination of risk versus reward. A good example is a hot tub or swimming pool on the property. The property manager and owner must balance the value of the pool with the risks incurred. When a risk such as this is identified, there are three ways in which it can be addressed:
1. Avoidance– The decision can be made to remove the hot tub or pool, as the additional rental income is not worth the cost of insurance or the risks involved.
2. Control– If the hot tub is retained, perhaps a coded lock and fence would be installed to keep out younger children.
3. Risk Transfer– The most prevalent way of dealing with risk is to purchase insurance to transfer the risk to the insurer.
The successful property manager will plan for problems, keep excellent files and records of every activity, and continually assess these functions to determine if change is necessary.