- Claims & Risk Management,Property & Casualty
- No comments
It’s a dream. You’re inspecting your business just moments before a planned opening. The service counters gleam, your inventory is varied and properly displayed, your employees are experienced and service-oriented, and the location is prime and likely to consistently attract traffic. You marvel at the floor plan and even admire the beautifully painted and appointed walls, one, by, one and…..there are no entrances or exits! Your head wants to explode from panic as you whirl around amid the impossibility of having a perfect business that is perfectly incapable of serving anyone!
From an insurance aspect, operating a business without a sufficiently wide approach to managing its accompanying risks represents an oversight nearly as large as not having entryways and exits. Only in a dream could there be the possibility of a business not having doors. However, in real life, many businesses have a narrow view of the risks they face and both situations are just as ruinous to a viable business model.
Whether a business is new or mature, its success depends upon key factors. The Small Business Administration figures indicate that seven key areas determine whether a business will survive. Poor management and lack of planning are among those factors and properly handling the risks associated with your business assists with avoiding both of these fatal stumbling blocks.
Your business model may be solely traditional or could be combined with some level of digital presence. Regardless, you have to properly identify your risks. Often a business will “stick with the bricks,” laying out its various physical assets. The next step is often to use insurance to check off whether a given policy will respond to damage or loss to business property including buildings, stock, vehicles, machines, etc. A natural accompanying step is to secure insurance for various, basic risks of operation, such as premises liability, vehicle liability, workers compensation, etc. Most businesses will also recognize a need to protect against business interruptions and loss of income and secure insurance against those sources of loss as well.
No one will deny the critical role filled by having the right package of property and liability insurance to protect a business. However, limiting how you address risk primarily to matching various policies against different sources of loss is the way a survivalist approaches living. But what business will be able to maximize its profit and growth potential by limiting itself to merely surviving? Properly managing your business and creating long-term plans for success means having a broader vision.
It doesn’t take much time or energy to find help with creating an exposure checklist and making decisions on buying some combination of, typically, a standard bundle of insurance policies. However, it does take a substantial amount of time, effort and, even more importantly, expertise to deal with loss exposures that affect your business daily. It takes even more sophistication to create an approach toward risk that can give your business a competitive advantage.
The old adage that “there’s nothing new under the sun” does not apply to today’s world of risk management. It has been decades since proper risk management meant merely identifying losses and finding ways to get reimbursed. True risk management also involves identifying opportunities for growth, being proactive in discovering and eliminating barriers to success, and aggressively leveraging opportunities. The key is to recognize that whatever expertise you possess in running your business is unlikely to include expertise in handling the wide array of risks faced by your business. Business owners with true acumen will recognize the need for expert assistance. Often such assistance should be sought from outside sources.
A major reason that businesses often hold a traditional, narrow view of handling risk is that to do otherwise means allocating too much time to do the job properly. Other reasons are that most businesses lack the ability and, what can be a tragedy, lack the awareness to seek needed help. Businesses that thrive, or wish to do so, will rid themselves of operational blinders and get a stronger grip on success by either developing or acquiring the resources to deal with the complex realm of risk.
A wide view of risk management means the ability to assemble the right array of insurance coverage to deal with existing property and liability loss exposures. A broader view of risk management will assist in creating a safer, more efficient and more profitable operation. It will allow a business to maximize coverage and minimize costs. More importantly, it can assist with ways to eliminate loss exposures or find more alternatives to handle them. A proper risk management approach will assist with growth, creating a monitoring system for controlling existing exposures, and identifying emerging risks, particularly those due to operational changes. A true risk management approach makes certain that a business has contingencies to avoid significant interruptions. A wide view of risk management helps identify methods of reducing financial limitations to pursue additional or different business opportunities.
A business that is too conservative and which doesn’t seek change is likely doomed to stagnation and, eventually, its demise. Growth means change. Change means new or expanded risks. Dealing with risks means having an aggressive attitude and securing risk management expertise. Take off any risk blinders you may have and increase your chances of success.