Being in business has many costs, not only in the delivery of your actual product or service but also in the operation as an organisation. Insurance is one are that you should never skimp on - unless you are in the very rare position to have the financial reserves to manage a catastrophic “what if” situation. Here we talk about Commercial Risk and what you can do to protect your company.
What exactly is commercial risk?
According to businessdctionary.com risk is defined as:
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.
While at first glance it seems to be quite a broad statement that encompasses almost anything that could go wrong, the key part of the definition is that it “may be avoided through pre-emptive action”.
Commercial risk is more specifically around the risks that can affect the commercial viability of your business (ie the ability to survive an incident.). Mitigating risk serves 2 purposes. Most importantly it keeps your business safe(r) from loss. Risk mitigation also has the advantage of ensuring more favourable premiums. It is a win-win all round.
What kinds of risks are we talking about?
Commercial risk cover is broken down into 3 fairly obvious and decidedly logical sections:
You would think that fire risk had become a thing of the past, and that we had all learned from some of the great tragedies in history. Sadly this isn’t the case and one of the big challenges around fire is the potential risk to not only your organisation but also those surrounding your physical site. Mitigating against fire risk is well documented and includes things like:
Risk example: wooden pallets stacked up against an external wall. What happens if the pallets are set alight? What buildings or services are at risk from a burning pile of pallets? Is the wall flame retardant? Are there windows through which flames could enter the building? Are there overhead power cables? What about neighbouring buildings and services? This is a common practice that could consequently cause a lot of loss.
With a title like general risk you would be correct in thinking that this covers off a lot of potential risks. Among other things general risk includes security, natural disaster damage and building protection. As a whole, New Zealanders tend to be a bit lax about security, often leaving cars and doors unlocked. Most of us do this at home rather than in our businesses, but what IS your business doing to protect itself from theft? Have an alarm system? Great! Is it monitored? Even better! If you were to add in a CCTV system as well then you’ll notice a huge impact on your premiums vs those who don't. Even basic deadbolts on doors and windows can make a huge improvement to your ability to mitigate against the potential risk of a security breach.
Health & Safety
Three little words that send shivers down the spine of many a business owner, but the implications of poor H&S process are undeniable. From a risk mitigation perspective you need to do a survey of the premises and look for hazards both inside and out. Is there anything that could injure anyone? Do all staff and visitors know how to keep themselves safe while on-site? What documentation have you got in place to prove all of this? Some time spent setting up and maintaining good H&S process can save a lifetime of misery for both potential victims and you as a business owner. Could you live with yourself if someone was seriously hurt at your business?
What if some things are already in place?
Great! You have some of your risks mitigated for. However that doesn’t mean you can just forget about it as something you have crossed off your to-do list. Make sure that everything you have is in good working order - test smoke alarms and check that security alarms and sensors are working. Double check your service contracts. Diarise when your alarms and sprinklers are due to be checked, and make sure the contracted company delivers.
Also, if you don’t have one already, consider changing out to a monitored alarm provider. They are contractually obliged to respond any time an alarm is activated and they are trained (and insured!) to handle security breaches.
Don’t be complacent! Legislation is moving more and more towards protecting the victims of incidents and consequently employers and business owners can no longer hide away hoping it won’t affect them. Take the time and every precaution to protect your business and it will be reflected in your insurance costs.
I’ll happily come to your business to talk through your risk profile with you. Firstly I can point out what you are doing really well and any areas that may be of concern to insurers. We will look at what you have versus what insurers would like to see. There will be mitigation factors that are more specific for your business and technology is always moving forward. I can provide you with checklists so you can keep on top of your own risk mitigation, and can assist with audits as often as your business needs them. Knowledge is by far the best weapon when it comes to protecting your business.
Get in touch now. It really is in the best interests of your business!
M: 021 930 991