Managing the Risk: Top 10 threats facing small businesses
Optimism is the fuel that drives the entrepreneurial spirit, so it isn’t surprising that most small business owners consider themselves optimists.
However, a business plan based on ‘best case scenario’ is like a house of cards. That’s why smart business owners temper their innate optimism with a healthy dose of reality. In other words, they learn to manage risk.
But what are the risks facing small businesses and what policies will help protect you?
1. Property: Property holdings are often the largest asset, so it’s vital that potential threats are evaluated, and a plan developed to manage them. Take a complete inventory of your assets to determine how a loss might affect your business, and how much cover you need.
2. Business interruption: If you had a fire or a flood you would need to move to a temporary location. However, traditional property insurance doesn’t cover the move, or loss of income while your permanent premises is being repaired.
3. Liability losses: Protect assets by holding adequate Public/Products Liability Insurance, which covers claims for bodily injury, personal injury (libel or slander), advertising injury, and property damage as a result of your products, premises or operations.
4. Key person losses: If a crucial employee in your business dies or has a serious accident, would you be able to maintain your current level of performance and revenue stream?
5. Injuries to employees: Workplace accidents can have a huge impact. Beyond initial treatment costs and lost production time, on-the-job injuries affect insurance premiums. Having the correct pre and post-accident procedures in place can reduce your employers’
6. Managing electronic data and computer resources: Small businesses often lack an IT department or even rudimentary internet security measures, which leaves them vulnerable to unscrupulous cyber-criminals. Cyber Liability insurance can help protect your business against damage from cyber-attacks, data breaches and other cyber-exposures.
7. Environmental exposures: It’s important to complete a comprehensive risk analysis to determine your level of exposure. Unless you carry Environmental Insurance, you may be unprotected against a claim.
8. Employment practices: From the moment you start the pre-hiring process until the final goodbye, you are at risk of legal action. Although most are groundless, defending them is costly and time-consuming. Employment Practices Liability will protect your company against wrongful termination, discrimination or sexual harassment actions.
9. Contracts: Many businesses don’t have the time or expertise to evaluate every clause in everything they’re signing. This oversight can be problematic and saddle you with large additional risks, accepted via risk transfer from savvy suppliers or customers.
10. Manage your supply chain: A disaster that interrupts your supplier’s regular business operations could have a crippling effect on your production abilities. Supply Chain Insurance covers losses incurred through interruption to your supply chain.
Insurance is a key component of any risk management plan, but successful risk management also involves prevention, training and continuity planning. Contact Pound Gates, Chartered Insurance Brokers on T: 01473 346046 to learn more about the tools and resources on offer to help you manage your risks or visit poundgates.com.