Insurance and risk management go hand in hand. While risk management examines possible risks in your business venture, along with ways to manage it, insurance is one of the most common ways to reduce this risk. Risk management firms provide contingency analysis on protecting businesses from possible loss of property, employees and other assets. They will also tell you what sort of risk insurance you should purchase.
According to the principles of risk management and insurance, you need to systematically discover what risks your business is prone to, which risks are most likely and should be dealt with promptly, and how to best implement risk mitigation--including which insurances to buy in order to protect your business. Once you realize there is a need to protect your assets from risk, there are three steps you can take:
1. Hire an insurance and risk management expert.
2. Purchase insurance for business risk management.
3. Find risk management articles (like this one), along with tools you can use.
Hire an insurance and risk management expertRisk management consultants are the first step to learning how to handle your business' risks. A good consultant will tell you what your insurable risks are, as well as help you prevent non-insurable risks. Some consultants specialize in corporate risk management, while others have more experience with medium- or small-sized businesses.
Purchase insurance for business risk managementIf your business doesn't already have general liability insurance, or if you need more specialized risk insurance, find a company that can offer you an excellent insurance risk management policy. Keep in mind your consultant's advice, and even run the policy past your consultant before purchasing.
Use insurance and risk management toolsSometimes it's smart to hire your own, permanent risk consultant, or to implement some common risk management tools yourself. There are a number of free or inexpensive tools available online for examining business insurance risks. Especially if you can't afford to hire a consultant, strongly consider buying a good risk management software program.
- Small businesses should not neglect to recognize that their biggest risk is often the death or injury of the sole proprietor or one of two or three partners. Because this can cripple the business or the business-owner's family, small business owners should implement risk mitigation by having adequate disability and life insurance.