Risks are inevitable in the world of business. One thing that separates a truly successful business from the competition is not an ability to completely avoid risks, but an ability to anticipate them and do what is necessary to protect against them. After all, in business, nothing ventured is nothing gained.
A business’s ability to manage the risks it is exposed to could be the difference between an unexpected event being a minor inconvenience, and the business needing to close for an extended period of time. Being reactionary is not enough; a proactive attitude is needed to look ahead and identify potential risks before they happen and ensure you have the necessary protection in place. Whether you are replacing equipment after a fire, or defending costly legal action taken against your business, planning ahead and purchasing insurance affords you a financial resource that could prove to be a crucial lifeline for your business.
However, deciding which insurance policies are right for your business can be tricky. By following the three steps below, you can begin to recognise the risks that your business faces, and in turn the insurance policies that are required to protect against them.
Step 1 – Identify the risks
When setting up a business, many entrepreneurs only briefly consider the obvious risks that they are likely to face during day-to-day operation of a business – such as spillages and tripping hazards. These common threats can be identified through conducting a basic risk assessment, and are likely to be generally relevant to most businesses. However, there are a number of other, often overlooked, types of risk that should be taken into account. It’s important that you take the time to identify these additional threats, and include them on your risk assessment where necessary.
One type of risk that exists in business is more unique in nature and will vary from business-to-business depending on certain factors, such as:
– The market you operate in
– The number of employees you have
– The size of your business
– Where your business is located
– What equipment your business uses.
As an example, consider a retailer on a busy street and the risks they face. Amongst other things, they must protect against the chance that their shop’s façade could suffer vandalism or damage with high levels of foot traffic passing nearby. However, this is something an online retailer may not even need to consider protecting against. Despite these risks being unique to your business, you should still document them on your risk assessment.
Finally, a business owner should expect the unexpected. Obviously perils such as fire, flood and theft are rare, but they have the potential to devastate a business, and there is no telling when they could happen. Typically, you would not include these on a risk assessment, unless your business model increases the chance of them occurring, for example the use of an industrial oven increasing the risk of a fire.
By considering all three different types of risks, you can improve your chances of covering every peril that threatens your business. However, simply acknowledging these risks is not enough. The next step is to decide the best way to reduce the chances of these risks occurring.
Step 2 – Reduce the risks
Reducing the chances of risks occurring is a good way to improve the safety of your business. Working from the risk assessment you’ve conducted, you should be able to identify the operations and processes within your business that have high risk levels, and then make sure relevant safety precautions are in place. This could mean ensuring staff wear protective clothing when handling chemicals, or providing periodic health and safety refresher courses for all staff members. You may find that you are required to perform a number of these tasks by law, but there is always more that can be done to improve and promote safety in your business.
Other actions that you may consider taking include:
– Updating your security system
– Installing additional smoke alarms
– Installing new locks on your doors and windows
– Nominating staff as designated first aiders.
Not only will these actions help reduce the risk around your business, but it can also help you manage the amount you spend on future insurance premiums.
Once you’ve identified and taken steps to reduce the chances of these risks occurring, the next step is to protect your business against the chance that these precautions aren’t effective.
Step 3 – Protect against the risks
There is only so much that you can do to minimise the chance of a peril occurring, and in the event that one does occur, you’re going to want to have protection in place to help reduce the impact that it has on your business.
To protect a business, most people will take out business insurance. In broad terms, business insurance can protect against many of the common risks that a business may face, such as the injury of a customer with public liability insurance, or the damage of their business premises with commercial buildings insurance. However, to ensure your business is properly protected, not only do you need to identify the right insurance policies, but also the correct extensions to add to them.
Take, for example, a retail store. The basic items, such as shop fittings, could be covered against damage and theft under a basic commercial contents insurance policy. But, if the shop owner also wanted their contents and stock to be protected while it was being transported between the shop and a warehouse, for example, they would need another insurance extension to grant this protection. A goods in transit policy, in this case, could be added onto the contents insurance policy in case theft, loss or damage was incurred during transportation.
So, as you can see, business insurance policies can be flexible to meet the variety of needs a business might have. The key to getting comprehensive protection from your insurance is not just to pick out the relevant policies, but also to add the appropriate extensions to those policies.
In business, risks have the potential to dictate your strategies and success. Planning ahead and taking calculated risks is the best way to grow. But failing to protect against fundamental risks can have a huge impact on your ability operate and grow as a business.
There is a lot to consider when ensuring that your business is properly protected, and it’s easy to overlook or forget things. As a result, many business owners prefer to navigate the business insurance market with the help of a business insurance broker such as Make it Cheaper. The professional help and advice offered by such a service can go a long way to ensuring you have the right protection in place for your business.
Author Bio: This article was written by James McAllister, a writer and content creator for Make it Cheaper. For more from James, he can usually be found on Twitter offering advice and tips to small business owners.
This is a great Post .SO well written on an often overlooked subject.One must go out of the way to gain customer attention so it is suggested to segment and recognize the right audiences before stepping into the market, thus covering yourself from the hazard .