Purchasing Resources for Small Business Insurance

Reducing Business Risk

Manage your business risks through planning and preparation
By Lou Bortone, Creative Director Granite Planet Productions Small businesses face a myriad of risks: Property losses, financial losses, lawsuits, workplace accidents, technology issues and product liability claims are just a few. But you can mitigate risks with some smart risk-management strategies. There are four main ways of reducing risk:

1. Risk avoidance: Avoiding the activity that carries risk. But nothing ventured, nothing gained.
2. Risk reduction: Putting measures in place to reduce the severity of the loss.
3. Risk retention: Accepting the risk; usually suitable for low-level risks.
4. Risk transfer: Getting another party to accept the risk, such as an insurance company.

Here are ways to plan for business risks and resources to help you mitigate them:
 

Develop a comprehensive plan

While it can be tempting to plan one-at-a-time for risk reduction, you'll have a much more effective plan if you assess and prepare for all of your risks.
Try: Check out the Institute of Risk Management for samples of risk-management plans and instructions on developing your own. Consider using risk-management software to determine risk priorities and probabilities. Examples of risk -management software include Methodware's Enterprise Risk Assessor and Risk Wizard. Or work with a professional risk manager; find some at the Global Association of Risk Professionals (GARP) or the Professional Risk Managers Association.

Plan for natural disasters

It doesn't take a catastrophe on the scale of Hurricane Katrina to put your business at risk. You can guard against "acts of God" by putting a business continuity plan (BCP) in place. Consider a BCP a "Plan B" - it spells out contingencies that will allow a company to continue operations if its facility is closed or employees cannot report to work.
Try: The Disaster Recovery Planning Group offers templates, toolkits and a "BCP generator" to help you plan for natural disasters. The Disaster Recovery Guide lists a directory of business-continuity and disaster-recovery consultants. Consider sending backup tapes off-site weekly, or having a redundant server in a secure location if your business would fail if you lost data. Check out data storage specialists like NetMass and SunGard Availability Services.

Insure against theft and property loss

Property and equipment assets should be adequately insured. "Blanket" coverage doesn't necessarily include all items, so check with your insurance provider.
Try: The Hartford's website provides some excellent resources, including a checklist for reducing property risks. 

Protect your employees

Proactively identify workplace safety issues and correct them.
Try: WorkersCompensation.com provides information and resources to employers, employees and insurers. The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) offers free on-site consultations for small businesses about safety hazards in the workplace. You can also take a variety of free online training classes from the Public Entity Risk Institute (PERI). Find an ergonomist to evaluate your workplace at the Board of Certification in Professional Ergonomics (BCPE) or Ergoweb.

Data protection and security

Technology and the Internet have introduced a host of new risks to business. Data loss or theft, computer viruses, hackers and privacy problems are just a few of the issues you need to address. You can beef up your technology security through software or by working with IT security consultants.
Try: Find professional data security specialists at the International Association of Professional Security Consultants (IAPSC). Interpol has an extensive information technology security checklist.

Liability risks

One of the most common business risks is general liability exposure, such as a customer getting injured on your business premises or an injury that results from a defective product. Some insurance brokers suggest "commercial umbrella liability" insurance for protection beyond your primary commercial general liability (CGL) policy.
Try: Business.com's article on Professional Liability Insurance will help you decide what you need to know before you purchase a liability policy for your business.

• Make sure you plan for data security risks so that you don't compromise private customer information or your own financial data.
• Ensuring that your company complies with state and federal safety laws - by putting up required safety posters, for instance - will help protect you against workers' compensation problems.
• Hire subcontractors to reduce workers'-compensation risks and make sure they supply Certificates of Insurance.