Building Business Resilience with Risk Management & Insurance

Insights

Whether you’re a new business owner starting a promising venture or a seasoned entrepreneur, finding ways to make your company more resilient will help it stay afloat amidst unexpected changes. In recent years, this resilience has been the key differentiator between companies that have survived and those that have shuttered.

The global pandemic, for example, brought disruptions in overseas supply chain operations, which impacted the timely distribution of products to customers and resulted in poor satisfaction ratings. Similarly, the increased frequency of cyberattacks have damaged IT systems, deleting businesses’ precious data and exposing their customers’ information.

These types of incidents, at best, cost time, stress, financial resources, and a damaged reputation.
At their worst, negative incidents have resulted in lawsuits.

Regardless of the type of risks you face, building resilience is the best way to keep your business fully operational. And this starts with developing the right risk management approach and evaluating insurance options that apply to your business.

What Risks Should You Prepare For?

Every business faces unique risks to its operations. These risks may be broad and industry-agnostic or they might be specific to certain sectors. It helps to know where your business falls on this spectrum.

Risks All Businesses Face

Consider employee retention and turnover. Every business deals with employee turnover at some point. Low turnover may mean your employees are generally satisfied with their work environment whereas high turnover might imply internal operations need a shake-up.

While this risk is ever-present, the impact of turnover may be more noticeable in smaller businesses because it’s easier to find coverage for the resourcing gaps at the larger enterprise-level organizations.
However, regardless of size, every company should be prepared for these types of risks.

Risks Unique to Each Industry

As a juxtaposition, consider IT threats. A remote, service-based software company will likely need to invest in stronger cybersecurity protection than a brick-and-mortar restaurant whose customers primarily sit in for meals and order online for home delivery.

If both companies’ IT systems crash unexpectedly, it’s much easier to keep the restaurant running because patrons can call ahead or walk in to order their meals. However, it would be more challenging for the software provider to manage thousands of calls from frustrated customers who can’t access their software online.

Developing a Risk Management Strategy

According to McKinsey, developing resilience across a business’s operations, finances, and technology can help it thrive amidst change. For example, using real-time analytics tools allows you to leverage your internal business data and predict possible changes on the horizon. Then, you can decide whether it makes sense to invest in one area of the business over another

A good example is choosing to implement a new employee training program on best practices for working remotely if your employees are most productive working from home a few days a week. Implementing such a program can address multiple risks, including lowering turnover (since employees feel more valued) and increasing productivity (as employees feel more empowered on a flexible schedule).

In tandem with identifying specific risks to your business, it’s also beneficial to invest in business insurance to address a wide range of issues your company will face.

Why Invest in Business Insurance?

Obtaining business insurance keeps your business safe from the unforeseen financial consequences of risks like accidents, natural disasters, or lawsuits. Depending on your business’s legal structure, you—as the business owner—might be protected from any threat that affects the business.

However, it’s hard to guarantee comprehensive financial protection as there might be unaddressed gaps, which if legally exploited, can transfer your business’s liability to you.

That’s where business insurance comes in.

Types of Business Insurance

The common types of business insurance include:

• General liability insurance protects any business from financial loss due to bodily injury, property damage, medical expenses, lawsuits, and more.
• Product liability insurance protects product manufacturers, wholesalers, distributors, or retailers from financial loss due to a defective product that harms or injures a customer’s body.
• Professional liability insurance protects service-based businesses from financial loss due to malpractice, errors, or negligence.
• Commercial property insurance protects businesses with large amounts of property and physical assets against loss and damage due to unexpected events such as fire, wind, hailstorms, and more.
• Home-based business insurance protects businesses operated out of an owner’s home and is typically added as a rider to a homeowner’s insurance.

It’s crucial to find the right type of business insurance that will protect your business while minimizing liability to your personal assets. Choosing the right coverage options can be challenging, and that’s where our team at Tomoro comes in.

Forward-Thinking Business Protection with Tomoro

Running a business is challenging as it is. With the help of Tomoro’s advisors, building resilience in every area of your business is an opportunity to gain a competitive edge. We understand how hard you’ve worked to develop systems and processes to sustain operations, and we’d love to help you find the right protections that minimize any financial and legal risks.

Whether you’re thinking about business insurance or other risk management options, our team at Tomoro will provide strategic financial advice to help you make the right decision.

Contact us to learn more about our planning services.