Risks are something your business can’t always avoid, but, a good risk management plan can help identify those you can manage, if something were to go wrong.
The first step in implementing a comprehensive risk management plan is identifying potential risks. We’ve put together five risks you might want to consider if you’re a small business.
1. Key person losses
Many businesses, and especially small businesses, are built around the talents and expertise of a few individuals, making their wellbeing crucial to the running of your business. You need to be prepared for different scenarios just in case something was to happen. Making sure day-to-day operations continue as usual, avoiding any disorder or uncertainty. It’s worth considering whether you would be able to maintain your current level of performance and current revenue stream, as well as cover for the financial loss of the employee or for a temporary replacement during their recovery.
Key person insurance can help protect these vital people in your business with confidence. This cover is designed to provide financial stability in a time of stress and uncertainty, allowing you to keep your business moving forward without missing a beat.
2. Protecting your property
Property holdings are often a small business owner’s largest asset. If you don’t own a property this could be your vehicles or the premises you work at, which all need protecting. For the long-term security of your small business, it is vital that you evaluate potential threats to your property or rented premises in order to develop a plan to manage those threats. You should begin by creating a continuity plan, identifying your assets, how the loss may affect your business and thereafter, how much cover you will need.
3. Business interruption, the what if…
If a fire causes your facility to be temporarily unusable, what would you do? Ideally, you would move to a temporary location while your permanent place of business is being repaired. However, whilst you might think you’re covered by property insurance, traditional property insurance doesn’t always cover this move or the loss of income while the permanent business location is being repaired. Of course, such a serious incident could cause a business to shut down operations during repair, which can do irreparable damage to brand reputation and leave employees without work for extended periods of time.
To mitigate this risk, consider business interruption cover. This cover, added to your property insurance, safeguards your business by covering operating expenses and lost income while the permanent business location is being repaired.
4. Managing your data and cyber risks
Sometimes small businesses don’t have access to a formal IT department or even suitable internet security measures, which could leave you vulnerable to cybercriminals searching for an easy target. With an estimated liability of more than £100 per compromised record (multiplied by hundreds or thousands of customer records), the cost of a single data breach incident can be devastating for a small business. To find out more, take a look at our case study on Betty’s tea room.
If your business stores customer records electronically, it is crucial that you have robust security measures in place. In addition if you work business to business (B2B), and are victim to a cyber-attack, the ramifications on your businesses reputation alone, can be significant.
Specialised technology cover, such as cyber liability insurance, can help protect your business against damage from cyber-attacks, data breaches and other internet-based exposures.
5. Manage your supply chain
Do you rely on one or more third-party suppliers to produce certain components used in your products? If you do, you need to be careful that if something were to happen to them, you would be able to continue your business as usual. Although you should always try to minimise potential liability through continuity planning and other risk management techniques, as supply chains grow across the globe, sometimes there is little you can do about the exposures faced by your suppliers.
Supply chain insurance is meant to cover losses you incur as a result of an interruption to your supply chain. Such cover allows you to work confidently with suppliers who face exposures beyond your control.
Insurance is a key component of any comprehensive risk management plan, but successful risk management also involves prevention, training and continuity planning.
At Jelf we are more than just an insurance broker, we are our clients’ trusted advisers.
We advise, on all areas of operational risk, including: health and safety; employment practices; and risk management, helping reduce claims and business disruption, protect your employees and manage your insurance premiums.
For more information visit Jelfgroup.com.
Source: Zywave, the management file, top 10 threats to small businesses