No risk, no reward. Managing risk is an essential part of running a business. A company that isn’t prepared for the worst can be destroyed by bad luck. A well-prepared company can weather misfortune and continue building wealth.
The risks of running a business can range from physical risk–say, a hurricane wiping out your offices–to liability, such as a customer suing for harm received from your project. The more kinds of risk you’re prepared for, the more confident you can be in your success.
Good advice can help you think of every possible type of risk you should be prepared for in your individual industry. An experienced financial advisor can guide you on proper risk management and help you decide what kinds of insurance you need.
An Ounce of Prevention
The first step of risk management is being aware of the risks to your company and taking steps to prevent them. The best disaster is the one you prevented before it even happened.
For instance, consider the physical safety of your buildings, products, and employees. Is your place of business as safe as it can be against fire or accident? Make sure all buildings are up to code, and employees are trained in emergency plans. If your work involves handling hazardous materials, everyone should be trained in proper handling and storage. Employees should know your safety policies, and these should be enforced. Toxic companies push employees to break safety procedures to save a few pennies, but the risk isn’t worth it when someone gets hurt.
If you work with data, you need to keep that data safe also. An IT professional can show you how to keep your information safe and only accessible to the people who need it. You should have a backup source of power in case of outages and backup hardware in case of damage. Where technology malfunction is concerned, it’s not a matter of if, but when.
Liability risk can be managed by ensuring your product and premises are as safe as you can make them. Never subject customers to an environment that endangers them or a product that hasn’t been tested thoroughly. Not only do you risk a lawsuit, but the reputation of your business can take permanent damage.
Planning for the Worst
Not every misfortune can be prevented. Sometimes, despite your best preventive efforts, disaster strikes. A hurricane destroys a warehouse, an employee is hurt, a pandemic breaks out and suspends business. How can your business survive such a catastrophe?
The same way individuals get through unexpected disaster: insurance. Almost everything that can harm your business is insurable. You can buy policies against property damage, product liability, cyber risk, equipment damage, and more.
Here are a few types of insurance available:
- Commercial General Liability Coverage: General business insurance that protects against property damage, bodily injury, and more
- Business Interruption Insurance: Insurance that protects your cash flow
- Product Liability Insurance: Insurance that covers your products
- Professional Liability Insurance: Insurance that protects you personally
- Cyber Risk Coverage: Insurance that protects you in case of cyber data theft
- Commercial Property Insurance: Insurance that protects your place of business
- Commercial Auto Insurance: Insurance that protects your company vehicles
- Equipment Insurance: Insurance that covers the replacement of vital business equipment in case of breakdown
- Key man insurance: Insurance in case of the death of someone vital to your company
Not every business will need all of these types. A good rule of thumb is this: if your company relies on it, insure it.
Good Advice Pays For Itself
With the staggering array of options available, it can be helpful to hire a professional to help you sort through it all. While it’s tempting to save money by doing everything yourself, a good financial advisor can save you much more.
First, they can help you list every risk your company faces, and make prevention plans for all of them. Next, they can help you sort through the array of insurance options to find the best price. With their help, you’ll neither miss a crucial step nor waste money on insurance for risks you don’t actually face.
You wouldn’t gamble with company funds. Don’t take chances on risk management either. A good business owner doesn’t need luck, because they’re prepared for whatever may happen. Contact us today and let us put you in touch with a trusted financial advisor that can help protect you and your business.