As a business owner, you have no doubt invested time, money and effort to build a successful business that you are incredibly proud of. Unfortunately unexpected events can have serious impacts on the financial stability of your business and could potentially lead to the loss of your business if you are not adequately protected.
The good news is, when it comes to protecting your business, there are a few things that you are able to do to gain some control during unforeseen circumstances and ensure that you and your business are able to overcome a loss.
Here is how you can plan for the unplanned.
How do you define a risk?
The first step to developing good risk management is to determine what exactly counts as a risk. The Small Business Development Corporation describes a risk in business as “an event or circumstance that has a negative effect on your business”.
The corporation explains there are six categories of common risks that may impact businesses. These include strategic, compliance, financial, operational, environmental and reputational. Other categories include safety, project, equipment, security, technology, stakeholder management and service delivery.
How to prepare for risk
To be prepared against risks, you should ask these five questions:
1. What are the risks?
2. How likely are they to happen?
3. Can they be avoided or reduced?
4. Can new risks arise?
5. Can I transfer some of these risks to insurers?
You should compile a list of all the likely potential risks that may impact your business, and plan what course of action will be taken in each circumstance.
Business Insurance policies to protect against risk
With unexpected events that cause damage or loss to business property, assets, customers, clients, employees or the public, financial consequences can have a large impact. Selecting the right insurance options and transferring risk to insurers is one way to ensure you are protected and can manage some common risks involved in running a business.
Some of the covers that business owners may consider to manage risk are as follows:
1. Worker’s Compensation Insurance
If your organisation has employees, this cover is compulsory to protect yourself and your employees financially in the event of a workplace accident. This policy offers income compensation if your employee is found unfit to work for a period of time, as well as financial aid for any medical expenses.
2. Public Liability Insurance
Liability cover protects your business against claims of injury, loss or damage to a third party that has arisen as a result of your negligence. This could include claims from a customer, client, stakeholder, supplier or member of the public.
3. Products Liability Insurance
If any of your businesses products lead to injury or damage, this type of insurance provides protection. This is necessary for any businesses that supply goods to customers.
4. Professional Indemnity Insurance
This protects professionals who offer consulting or advice services, and is strongly recommended for any business that provides a Professional Service. In the event that professional negligence negatively impacts a client, you and your business will be protected for defence costs and damages.
5. Business Interruption Insurance
If your company faces catastrophe such as storm damage, earthquake or any damage that is covered under a Property Insurance Policy a Business Interruption Policy can protect your income whilst you re-build your business.
6. General Property Insurance
In the event of accidental loss and damage, a General Property policy can provide cover for specified and unspecified items Australia Wide.
Small Business Insurance with Atlantic Insurance
Since the 1980s, the team at Atlantic Insurance has been offering considered, tailored insurance advice and solutions to Australian small businesses. With a strong understanding of the risks involved for various types of businesses, our experienced Client Managers have the experience to assist you manage your risks.
Any information contained on this page of the website is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Your should consider these, having regard to the appropriateness of this advice and the relevant Product Disclosure Statement (‘PDS’), Target Market Determination (‘TMD’) and Financial Services Guide (‘FSG’), which will be provided following any formal recommendation to you.
