Small Business Owners – Top 10 Insurance Tips (Part 2)

Following on from last week, here is the 2nd article in our series detailing the top 10 threats facing small business owners:

  1. Managing Electronic Data and Computer Resources

Small businesses often lack a formal IT department or even rudimentary internet security measures, which leaves them vulnerable to unscrupulous cybercriminals searching for an easy target. With an estimated liability of more than £100 per compromised record (multiplied by hundreds or thousands of customer records), the cost of a single data breach incident can be devastating for small business owners. If your business stores customer records electronically, it is crucial that you have robust security measures in place. In addition to taking preventative measure to reduce Internet-based exposures, specialised technology cover, such as cyber liability insurance, can help protect your business against damage from cyber-attacks, data breaches and other internet-based exposures.

  1. Environmental Exposures

Think of a business with significant environmental exposures. What comes to mind? Most people think of a large manufacturing, mining or petroleum operation, but these are not the only industries at risk for environmental liability losses. It is important to perform a comprehensive risk analysis to determine your own level of exposure.

  1. Employment Practices

From the moment you begin the pre-hiring process until the final goodbyes at the exit interview, you are at risk for a legal action. In fact, three out of five employers will be sued by a prospective, current or former employee while they are in business. Although many legal actions are groundless, defending against them is costly and time-consuming. Small business owners should take a hard look at whether they can afford to defend against accusations of wrongful employment practices. Liability insurance can help protect your company against wrongful termination, discrimination (age, sex, race, disability, etc.) or sexual harassment legal actions.

  1. Contracts

When first starting out, many new business owners simply don’t have the time or expertise to adequately evaluate each clause in everything they’re signing. This oversight, however, can create major problems down the road. In many cases, small businesses become saddled with large additional risks, accepted via risk transfer from savvy suppliers or customers. While it’s tempting to shave costs by skimping on legal fees, making sure your business isn’t accepting additional and unnecessary risk can save you a lot of money over the long haul, both in legal costs and in insurance covers.

  1. Manage Your Supply Chain

Do you rely on one or more third-party suppliers to produce certain components used in your products? If you do, a disaster that interrupts your supplier’s regular business operations could have a crippling effect on your production abilities. Although you should always try to minimise potential liability through continuity planning and other risk management techniques, as supply chains grow across the globe, sometimes there is little you can do about the exposures faced by your suppliers. A-Plan has products which can help manage your risk.

Insurance is a key component of any comprehensive risk management plan, but successful risk management also involves prevention, training and continuity planning. Contact A-Plan to learn more about how we can advise and help you to manage risks.