Unexpected losses can have a huge effect on your business. Just look at the example of BP with the Gulf oil well disaster. Not only is there a huge monetary loss for BP (at least $20 billion and counting), but there is the loss of reputation and other wasted resources. Most small to mid size companies could not survive a major loss.
Many large U.S. corporations have risk management divisions; many small businesses don’t. In my experience working with small to mid-size businesses, the owners often wear a lot of hats, including risk manager. Commercial insurance is viewed by most entrepreneurs as a necessary evil at best and a drain on their operating budget at worst – until a loss happens. Then there is a mad scramble to find the company’s insurance policies and understand if the policies cover their particular loss.
There is a better way.
Rather than wait until a loss to develop a risk management plan, it is a much better practice to be proactive! Prevent certain losses and have a plan for when a loss occurs. Here are some questions to consider when developing a proactive risk management plan:
1.) What are the current exposures to risk in your company and have you developed a plan to manage the risk?
2.) What are your growth plans over the next 3-5 years and what risks may develop over that period?
3.) What is your Disaster Recovery Plan?
4.) How often do you review your Plan?
5.) How do you measure your progress as a company?
6.) How have you communicated the Plan to company executives? Do your employees know what to do depending on the situation?
Contact your risk advisor about these questions and how to identify all of the risks your business my face. Don’t have an advisor? Texas Associates can help. Don’t wait until there is a loss to figure out what your next move should be. A reactive response could result in:
1) Lost Employees
2) Loss of Key Personnel
3) Loss of Revenue
4) Business Closure
A proactive plan can minimize these risks significantly. Don’t delay!