How to reduce common business risks

There are a lot of things that can wrong for a business owner. But with a little forethought and a small investment of time and money, many of those risks can be substantially reduced.

The typical business owner confronts risks related to safety, operational, financial, strategic, reputational and compliance issues. If these risks can’t be eliminated – and often they can’t – most business owners will do whatever is feasible to reduce the risk and make sure they are insured against a worst-case scenario.

“Keep financials up-to-date and stored offsite, so you have ready access to all your business information should something like a fire happen”

The unholy risk trinity

1) A staff member has an incident at the workplace.

How to manage it: Buy the appropriate medical equipment and supplies. Have a first aid and emergency plan in place. Err on the side of caution when providing staff with personal protective equipment. Be rigorous about training and instructing staff, especially new hires, about any risks they will face and the correct way of dealing with these risks. Make sure the workplace is well-lit, well-ventilated and remains as clutter-free as possible. Adopt a no-tolerance policy with workplace bullying and stay alert for signs staff are feeling anxious or depressed.

The relevant policies: Workers’ compensation is legally required and public liability insurance  may also be a good idea.

2) You are injured or unable to work.

How to manage it: Most SMEs grind to a halt if the owner is out of action. The measures described above can reduce the risk of physical injury but the stresses involved in running a business can lead to mental health issues. Devise a self-care plan. One that puts a ceiling on your work hours, encourages delegation where possible and gives you time to get support from friends, family members, mentors and possibly a mental health professional.

The relevant policy: Income protection insurance.

How to manage it: A combination of government regulation and common sense means most business owners take the necessary precautions about their workplace being flooded, robbed or burnt down. Unfortunately, far fewer adequately protect the IT infrastructure their livelihood is dependent on. Business owners should at the very least install anti-virus programs and firewall technology, as well as arranging for data to be regularly backed up. They may also want to introduce (then strictly enforce) a BYOD policy and invest in data encryption.

The relevant policy: Cyber insurance.

How insurance pays off

Anthony Barbara is the Managing Director of AJB Insurance Solutions, which is part of the Steadfast network. Being part of this network allows Anthony to negotiate better  prices for his clients, making sure they get “the right cover at the right price”.

Anthony vividly recalls the difference being appropriately insured recently made to a client. The client’s mechanical workshop burned to the ground while an employee was on the premises. Fortunately, the employee escaped with only minor injuries but the workshop and everything in it which included 10 cars; was reduced to ashes. Anthony was alerted to the fire within hours of it happening. He immediately started the claims process.

My client had a package of policies; fire, property damage, business interruption, theft, public liability and customer vehicle cover – so he was well insured,” Anthony says. With Anthony concentrating on the insurance paperwork, his client was able to focus on getting his business up and running again.

Within two months, courtesy of payments beginning to flow from the insurer, the client was working from a temporary location and had started planning how to rebuild his workshop. While the fire was a setback, it wasn’t fatal to the clients business. The insurer covered expenses, such as compensating the 10 customers who had their vehicles destroyed.

Anthony has the following advice for business owners: Keep financials up-to-date and stored offsite, so you have ready access to all your business information should something like a fire happen. Have an evaluation of your premises done every three years and update your policy to match. Do a stocktake of materials and equipment at least once a year and update your policy accordingly.”

Your broker or adviser like Anthony would be happy to talk to you about how you can best manage the risks your business faces.

 

Important notice – Steadfast Group Limited ABN 98 073 659 677

This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your insurance broker or adviser as to whether these types of insurance are appropriate for you. Deductibles, exclusions and limits apply. These insurances are issued by various insurers and can differ.

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