Business risk management

RISK MANAGEMENT

Managing risks is a commonly overlooked

element in business planning. It is one of the

critical factors in determining the success of a

business. This list is not complete and it is not

in order. It’s a basic guideline for i

dentifying

risks. A startup business can’t afford all forms

of insurance and security systems. Therefore a

careful list of risk priorities is important.



Crime losses are discouraged by adequate

security systems, safes, alarms, opening and

closing procedures, etc.



Independent auditors perform an annual

certified audit.



Emergency plan is in place to provide an

orderly management to determine which

operations will be shut down and which should

continue.



All accounting records, valuable papers,

important papers, computer generated data are

kept in duplicate with copies in two different

geographical locations. Duplicate property

records are kept describing description,

location, original costs, market value,

replacement costs of all fixed assets at different

locations.



All data processing data, hardware and

software are duplicated or can quickly be

replaced in case of damage. If outside services

are supplying data processing or any other

service, those suppliers have the similar

contingency plans for their business

interruptions.



The risk of losing incoming data or inventory

rests with the seller, shipper or carrier. The risk

of losing outgoing data or inventory rests with

the buyer, shipper or carrier.



Insurance applicable to any risks

automatically adjusts to changing values of

each risk.



A decision has been made to a settlement

basis for all insurance coverage.



The fire rate base has been examined to

see if any rate reductions can be made through

structural or alarm system improvements.



All building and equipment leases determine

which party has the risk for loss and

responsibility for appropriate amounts of

insurance.



Local building codes have been reviewed to

determine any regulations or restrictions that

apply to the restoration of property after a loss.



The insurance broker: has all property

insured on an “All Risk” form, submitted a

”Difference in Conditions” form, property is

insured on a “Highly Protected Risk Basis.”



Purchasing, disbursement and inventory

control procedures are in place to avoid losses

from employ dishonesty.



Consideration has been given to: impact on

operations and revenues should main location

be damaged, impact on operations and revenue

if a major supplier or customer shuts down.



The Umbrella Policy does not contain

exclusions to: Non Owned Equipment, Liquor

Liability, Property in the Insured’s Possession,

Punitive Damages.



All subcontractors are required to furnished

proof of Public Liability and

Workmen’s’

Compensation Insurance through proof of

currently paid premiums.



Manufactures and suppliers can submit

proof of their Vendors’ Liability Insurance.



POSSIBLE INSURANCE NEEDS

Liability: Premises and Operations,

Independent Contractors, Products and

Completed Operations, Contracts, Personal

Injury, Employee Benefits, Owned Equipment,

Non Owned Equipment., General, Product,

Errors and Omissions, Malpractice, Vehicle,

etc.

Fire and Theft, Business Interruption, Personal

Disability, Key Person, Shareholders’ or

Part

ners’, Credit extension, Life, Health, Group,

Electronic, Power Interruption, Temperature

Damage, etc.

2

CATEGORIES of BUSINESS INSURANCE

PROPERTY

Insures office equipment, inventory, an owned

building, improvements to retail space.

How Much Coverage?

What amount of money would it take to restart

your business if all of it was reduced to ashes?

LIABILITY

Insures against lawsuits - accidents causing

bodily injuries, damaged caused by products

you sell, liable, slander and false advertising.

DISASTERS

Earthquakes, floods

UMBRELLA

Covers claims seeking more monetary damage

than the limits of PROPERTY insurance.

EMPLOYMENT PRACTICES

Lawsuits for sexual harassment, wrongful

termination, job discrimination, any claims

alleging claims based on failures in employment

practices. Covers legal bills and settlement.

VEHICLES (owned and non owned, rental)

Cars, trucks, heavy equipment, etc.

PROFESSIONAL LIABILITY

(for service based businesses)

Covers clients experiencing disastrous results

from your consultation.

WORKMANS’ COMPENSATION (required by

state)

Medical payments and disability for employees

when injured on the job.

BUSINESS INTERRUPTION

Provides cash to reopen a business after a

disaster. Can make up cash differences before

loss of income and after reopening.

ELECTRONIC DATA PROCESSING

All computers (theft, fire, break downs, etc.)

ALL-IN-ONE

Policies that cover all of the above but in one

contract.

10 MISTAKES TO AVOID



Having no insurance



No commercial insurance on company cars



Low liability coverage



No disaster coverage



Using wrong agent - select a pro in small

business insurance



No employment practices coverage



No coverage of family members under

WORKMANS’ COMPENSATION



Not shopping around



Filling too many claims



Not completing an annual insurance audit