As a business owner, when it comes to managing your risk and protecting your business, you have three main choices:
- Accept the risk and its consequences.
- Manage the risk to reduce or eliminate it.
- Take out insurance to protect your business against the risk.
1. Accept the risk and its consequences
The first strategy brings with it serious risk as most businesses couldn’t survive the financial loss in the event that the worst does happen. Without taking steps to reduce risk, it is more likely that your business may be affected.
Most business owners protect their business with a combination of the second and third strategies. They insure against the major risks they face, while also taking active steps to reduce, minimise and eliminate risks.
2. Manage the risk to reduce or eliminate it
Risk management involves identifying, assessing and treating risks that could potentially affect business operations. The first step to doing this is to make a risk management plan detailing your business’ strategies for dealing with each risk in order to reduce the likelihood of an incident affecting your business.
It’s important to remember that risk identification and management should not be a one-time practice and your business’ risk management plan should be regularly monitored and updated in order to ensure effective control measures are in place for existing, new and developing risks.
3. Take out insurance to protect your business against risk
Insurance can help to protect your business against risks that cannot be completely eliminated. There is a wide range of policies available on the market, however the most appropriate for your business will depend on your specific circumstances, such as the products / services you provide, the number of employees you have and the risks that your business is exposed to.
Some common policies to consider include:
- Public Liability Insurance: Protecting your business against financial claims if you or an employee is found liable for the death or injury of a third party, or damage to their property through negligence. For example, if a customer is injured on your premises.
- Product Liability Insurance: Insurance covering any legal action arising from death, injury or damage caused by a product that your business manufactures or markets.
- Professional Indemnity Insurance: Providing personal protection against claims that arise as a result of professional advice you’ve provided.
There are many other covers available on the market that may be appropriate for your business. Speak to your insurance advisor about how to best protect your business.
Adapted from a story on the PSC Connect website.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.