Author Archives: castano9

Exposing Your Treasures

When we decide to help out a cause we believe in, we often give of our time, talents and treasures. Whether we are helping out at church or a non-profit, we often do not think of how we might be opening ourselves to liability. Inadvertently, you may be exposing yourself and your assets to risk by not making sure that the church or non-profit you are helping is properly covered. This is not often one of the first questions you ask when offering to help:

“How can I help and please provide me a copy of your insurance coverages?”

Serving on the board of a non-profit may open you to being liable for the decisions of the board. Before agreeing to serve on a board of any company or non-profit, be sure to ask for a copy of the directors & officers policy to make sure you are properly covered. A careful assessment of any organization’s risk management plan would be a valuable contribution as a board member. Some questions to ask:

1.)    What is the organization’s 3-5 year risk management plan?

2.)    When claims or losses have occurred, in what areas did they normally happen?

3.)    What are the biggest areas of risk for the organization?

4.)    How are the management and employees being trained to avoid risks?

5.)    Does the board carry Directors and Officers coverage?

Your well-intentioned desire to help others should not lead to you exposing your treasures to unnecessary loss.

Do you want to get knocked out of the game?

Insurance. Who wants to talk about insurance? Your focus is growing your business. Adding to the top line. Increasing revenue. Becoming more profitable. Part of growing your business is learning to manage your risk.

Most entrepreneurs are focused on building their businesses and they fail to properly manage their downside. One bad accident or weather event can knock you out. All your hard work and ingenuity can be lost by one event out of your control. Most small businesses that are hit with a major loss do not have the insurance in place to make a recovery.

Part of managing that risk is to build a team around you that can help you think through the right issues for you and your company. Large companies have large risk management divisions to watch the downside. Small to mid-size companies may not be able to afford to have risk management teams.

Some things to consider:

When was the last time you had your contracts or leases reviewed from a risk perspective?

Is a risk advisor part of your inner circle of advisors?

Who is helping you implement your risk management plan?

Do you know the most common form of losses to impact companies in your industry?

You need an advisor to help you plan for managing your risk. Call your advisor at Texas Associates to schedule a time for a comprehensive Risk Management Analysis.

Proactive vs. Reactive

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!