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A review of the business and market risks that insurance companies face in business

Although pitfalls and challenges can't be avoided, they can be mitigated with the proper precautions, planning and insurance coverage.

A review of the business and market risks that insurance companies face in business

Insurance and legal experts shared their thoughts on today's biggest insurance risks for business owners, and what you can do to protect yourself against them. Data breaches Businesses in all industries have seen a huge increase in cybersecurity problems in recent years. However, he added that every business that accepts credit cards should be re-evaluating and standardizing its security practices to protect against fraudulent activity.

If you have a brick-and-mortar store, one of the most important things you can do is ensure that your credit card technology meets EMV standardsto prevent fraud liability from falling onto your shoulders, Roach said. Myles Gibbons, president of select accounts at Travelerssaid that more than half of data breaches last year occurred in companies of 250 or fewer employees.

What Do You Need? While your storefront or office may not have been completely destroyed, chances are, you won't be able to run your business out of there while repairs are happening. Your first line of defense against the negative effects of property theft or damage is insurance coverage.

  • In manufacturing plants, several large auxiliary generators can keep a factory operational until utility power is restored;
  • This could be something as simple as setting aside financial reserves to ease cash flow problems if they arise or ensuring effective computer backup and IT support procedures for dealing with a systems failure.

Gibbons noted that some businesses aren't adequately insured to their true values. Properties should be insured to their full replacement value — not market value — including any recent improvements. This is particularly critical for businesses with limited capital reserves.

  1. Product liability insurance is also a necessity.
  2. The map allows you to visualise risks in relation to each other, gauge their extent and plan what type of controls should be implemented to mitigate the risks.
  3. Technology Risks Power outage is perhaps the most common of the technology risks. The Bottom Line While business risks are abound, and their consequences can be destructive, there are ways and means to insure against them, to prevent them and to minimize their damage if and when they occur.

Then, "adopt controls for mitigation and prevention, which can include emergency response, public relations, resource management and employee communications," he added. Human capital costs If you have employees, you have a significant amount of business risk. Whether an employee is performing a labor-intensive task, driving a company vehicle or interacting with the public, there is a risk to the company, said Bryan Robertson, equity partner at Sihle Insurance.

Workers' compensation insurance is mandatory for any business with employees, but there are other insurance coverages you can get to mitigate your risk as an employer. Robertson advised looking into management liability and employment practices liability insurance. In terms of layoffs, thoroughly planning for employee departures is the best thing you can do to avoid financial and legal recourse.

Consoli recommended offering benefits — such as severance packages, payment for unused time off and continuing health insurance coverage — to laid-off employees.

6 Big Business Insurance Risks (and How to Mitigate Them)

You should also focus on pending workers' compensation claims that might be affected by layoffs and on conducting midyear reviews of your resources to scale back when necessary, he said. Professional service mistakes Service providers like accountants, consultants and web developers all face the constant risk of customers seeking legal recourse if their "product" doesn't meet expectations.

Kevin Kerridge, executive vice president of the direct and partnership division at Hiscoxa small business insurer, said that a common challenge for many small business owners is overcoming the mind-set that their work is so good that no client would need to sue them. Kerridge recommended that owners of any service-based businesses look into professional liability insurance. A lot can go wrong in the journey from factory to warehouse to showroom to retail store, especially if it happens outside your home country, Camhe said.

Identifying and managing business risks | Investopedia

Camhe advised looking into contingent business interruption CBI insurance to soften the financial impact of a problem with a vendor in your supply chain — a fire at your manufacturer's factory, for instance. Camhe also suggested foreign package policies to extend your insurance coverage to any international exposures you may have. Building projects According to the U. Census BureauU. This industry boom indicates that building projects are increasing, and many of those projects are commissioned by businesses and educational organizations that want to expand, Consoli said.

However, he noted that construction comes with a fair amount of risk that business owners should consider before moving forward with a contract. Consoli said proper planning is essential for construction projects and that you should clarify the language in the contract to ensure you're not overpaying for the builder's reimbursements.

As for insurance, Consoli advised going over your policies to understand what it does and doesn't cover in terms of damages or injuries that occur during the project. Who pays for water damage during a storm? What happens if materials for a build are weeks late and this prolongs the entire project?

Make sure all of your ducks are in a row before the expansion. Doing so will guarantee proper coverage while also mitigating financial risk to potential insurance overbillings. Every industry and every individual business within an industry face different levels of risk, both in terms of the probability of something happening and the severity of the consequences, Kerridge said. However, ignoring those risks is simply not an option, he said. Each has something valuable to contribute to minimizing risks efficiently and effectively, he said.

She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. You May Also Like.