If you are a business owner, you will face a range of different risks in the daily running of your business. As well as wider, long-term risks which can impact the way that your business operates.
The first part of minimising business risk is understanding the risks that your business faces. And then taking the right steps to guard against these risks – a key element of which will be having the right insurance in place.
What are the Top 10 Business Risks 2022?
The survey includes responses from 2,300 risk decision makers, from small, medium, and large sized businesses. And identifies the top 10 risks businesses may face.
The top 10 business risks highlighted by the report are
- Cyber-attack and data breach
- Business interruption
- Economic slow down
- Commodity price risk/scarcity of materials
- Damage to reputation/brand
- Regulatory/legislative changes
- Pandemic risk/health crisis
- Supply chain or distribution failure
- Increasing competition
- Failure to innovate/meet customer needs
You can read the full BIBA manifesto here which provides a more comprehensive overview of these business risks and why it will be important to manage these risks.
How can your business effectively manage risks?
The list above focuses our attention on just how diverse the risks that your business faces are.
And recent events such as the COVID-19 pandemic, and the Ukraine invasion both highlight the direct and indirect implications for businesses of all sizes that large scale events such as these can have.
For example, the impact that the COVID-19 pandemic continues to have on supply chains and the price increases and cost of living impact of the Ukraine invasion.
Taken together we can see that it is essential that your business is managing risk effectively given all the different factors which are at play.
You’ll want to make sure that you carry out regular risk assessments for your business.
Think about areas such as;
- Business continuity – how will you continue essential business operations during and after a disaster occurs which negatively impacts your business in some way?
- Cyber security – how can you provide clarity about what is expected of employees when it comes to data security and use of company systems and applications. How can you mitigate cyber security risks in the face of the ever-rising prevalence of cybercrime?
- Data security – what are the risks and ways in which your data can be breached and how you can put processes and procedures in place to prevent these risks?
- Flood risk – as we see more extreme weather events taking place your business will also need to assess your risks in these areas and take steps to respond
The role of insurance in managing risk
Insurance will play a significant role in how you manage and minimise your risks as a business. Particularly the financial implications of the risk of loss, damage, or theft.
The financial implications of these types of events can be significant and put pressure on your businesses ability to succeed. And this highlights just how important it is that you get your insurance coverage right.
The risk of underinsurance
Underinsurance is a way of saying that you do not have enough insurance for your needs. It typically occurs when businesses fail to correctly estimate the level of cover, they need to protect their assets and costs of getting back up and running.
There are two key risks at play when it comes to underinsurance:
Cutting back on insurance
With many businesses seeing rising costs and pressures on their operations, we may expect some businesses to cut back on their insurance as a way to reduce business costs.
This can happen in two ways; reducing the amount of insurance cover that you have or reducing the types of insurance cover that you buy.
But you should see this as very much a short-term solution – yes you may reduce your outgoings but if you do come to claim and do not have enough cover or the right insurance then you will need to find other ways to cover your financial losses. And this can put the financial security of your business at risk.
Not having the right insurance covers in place
Risks are ever changing, and your business will need to respond accordingly. Not just in the way that you assess risk but also in the insurance cover that you have.
Cybercrime is a big area that businesses must take seriously. The threat is ever increasing, and cyber criminals become more and more sophisticated as time goes on. If your business hasn’t considered investing in cyber insurance, then this could leave your business exposed if you do suffer a cyber breach. Especially given that the implications of a cyber breach can be wide ranging – from financial through to reputational damage.
Why consider working with an insurance broker
If you are concerned about having the right insurance in place to protect your business, then working with an insurance broker can help give you peace of mind.
Insurance brokers such as Anthony Jones are insurance experts. We understand that the risk landscape is ever changing and are aware of the insurance covers which your business will benefit from taking out.
As a business owner you may not be aware of emerging risks, or you may downplay the exposure your business has to such risks. Which in turn can impact your insurance buying decision.
A broker has the benefit of having worked with many businesses and having seen first-hand how different disasters impact them. From areas including how long it really takes to recover from an event such as flood or fire to the growing number of cyber-attacks impacting SMEs. These factors can all feed into the types of insurance and how much insurance you require. Without this background knowledge, it is easy to see why businesses can find themselves in a position of underinsurance.
Working with a broker who specialises in business insurance can give you access to a wealth of experience in the insurance market as well as people who can advise on risk management. If you have any questions, then do get in touch with us today on 020 8290 9080 or email us as firstname.lastname@example.org.