Do you know all of your risks?
All business involves risk. From natural disasters such as fire and flood, theft, building works on your doorstep that disrupt your trade, or a person suffering bodily injury or property damage. It is impossible to predict, let alone prevent, all future risks. But there are 4 key steps that you can take to manage the risk and potentially reduce the impact on your business because you have plans in place should this occur. You know what they say "fail to plan and you plan to fail." It would be very sad to destroy all your hard work because you failed to take into account all the risks.
1. Identify your risks
The first thing to do is to compile a list of risks you could potentially face. You could use the help of an experienced insurance broker, or a business mentor or even your other business networks. The government also has an online guide to help you assess your business risks. Click here
to access this guide.
Risks are different for every business. For example, if you run a manufacturing business and rely on machines to produce your stock, then a breakdown could result in stock reduction. If running a caf√©, your customers could suffer from food poisoning if good hygiene practices are not followed. Or if you run an online business and your internet connection is down for hours or days, you risk losing business and customer goodwill.
identify your insurable risks as well as other pure risks
As well as physical risk to your business property, employees or clients, there is also the financial loss that results from not being able to generate any income because your assets are out of action. Not to mention the potential disruption to the supply chain you operate in and even the damage to your business reputation.
An insurance broker can work with you to help identify your insurable risks as well as other pure risks. Then you will be able to make an informed decision to transfer such risks to insurers, or self-insure or avoid the risks altogether.
2. Managing risks
From the risks identified, it is then important as soon as possible to put in place strategies to manage them. The best time to consider your risk management strategy is when you draw up your Business Plan. We recommend always having a Business Plan.
download a Business Plan template
to download a Business Plan template provided courtesy of the Australian Government. Make sure that you review your risk strategy on a regular basis. Update it as well as updating your insurance covers as your business grows.
There are many ways to manage risk. Click here
for suggestions courtesy of the Australian Government's business portal.
You can also reduce some risks at little cost with simple actions, such as backing up your computer data, installing smoke alarms or providing your staff with safety training. Another suggestion that suits many businesses is outsourcing tasks, such as bookkeeping or computer networking and even Human Resources Management if you are employing staff. This way you are using specialists which will reduce your risk of costly errors or malfunctions.
You can also buy protection against many business risks through insurance. Some insurances are required by law, such as workers' compensation to cover injuries to your employees or professional indemnity for certain occupations. Others simply make good business sense, such as management liability. Speak to your insurance broker to obtain this advice.
3. Cover all bases
Most people understand the need to insure their business assets, such as buildings, contents and motor vehicles for events such as fire, theft or damage. But business interruption insurance is arguably just as important. This helps cover any loss of revenue if you are prevented from trading due to an unforeseen event. It also provides cover where you cannot access your premises due to damage to adjoining premises.
cover any loss of revenue if you are prevented from trading
Even if you are working from home, you may need to consider public liability insurance and if in the professional services sector, professional indemnity insurance. The former offers protection if a client is injured on your premises whilst the latter protects you if someone takes legal action against you for an alleged error causing a financial loss as a result of your professional advice.
4. Seek advice
CPR Insurance Services have in-depth knowledge of insurance products and can suggest a business insurance package tailored to suit your business. This is often more cost-effective than putting together a patchwork of single policies that could leave you exposed.
Remember, every business is different, each having very different risks and varying degrees of risks that they face.
Don't ignore the risks your business will face
A lot of money can be invested to start a business. Don't jeopardise this by ignoring the risks your business will face. With some planning on your behalf, as well as help from experts, you can put a procedure in place to assist in recovery as quickly as possible should an adverse event occur.
General Advice Warning This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.