Starting a business comes with a lot of risks. As a business owner, it is your responsibility to understand and assess the multi-faceted risks that your business faces. While risks and challenges cannot be avoided, with careful considerations and precautions, they can be mitigated.
Let’s have a look at some of the most potent business risks that business owners face in 2020:
Cyber Risks:
While the application of technology is being integrated into all kinds of businesses, is anyone really doing it well? In recent years, businesses all across have witnessed a large number of data breaches and cybersecurity threats. According to the 2019 Verizon Data Breach Investigations Report, 43% of data breaches and similar online attacks were solely focused on small businesses.
Moreover, 71% of all attacks were financially motivated and 52% attacks featured hacking and credit card fraud. In such a scenario, taking appropriate precautions is a sure-shot step to prevent fraud liability. One way is to update your credit card technology according to the EMV standards so that your security measures are always up to date.
Property Damage:
Your office space and physical property can be affected by hurricanes, snowstorms, floods, fires and similar natural causes. On the other hand, non-natural threats like theft, arson can cause major destruction as well. These incidents can seriously harm your business operations and putting your entire work at risk. Most businesses that undergo such traumatic experiences are unable to restart operations unless they have insurance. Reports showcasing physical damage to businesses have calculated a staggering 59% of cases worldwide.
In such scenarios, the best way to prepare yourself is to get insurance coverage for your business. This includes insuring your office space as well as its interiors and all your equipment and inventory. Another step to prepare yourself is to have a disaster recovery plan so that you and your business have a process to follow in case of an emergency.
Human Capital Risks:
According to David Creelman, CEO of Creelman Research, Human capital is present as a component in everything that can go wrong in a business. If you employ people in your business, there are bound to be certain risk factors that appear as your human capital index grows. From complacency to high attrition rates to occupational fraud to negligence and workplace accidents, there are several risks to the company.
In order to mitigate this risk, certain organizations rely on sustained industrial training and workshops to ensure that their employees comply with the regulations in place. While worker’s compensation insurance is a mandatory process for every business if it has employees, another aspect of protecting your business is to invest in insurance against management liability to protect yourself from lawsuits. However, this too can be prevented if as a business owner, you focus on creating better practices for employees who have been laid off, creating policies for employee departures and making sure you create and promote a healthy work culture.
Product Liability and Professional Service Risks:
Most businesses are either product-based or service-based, sometimes both. As a business owner catered towards providing a certain service to customers, your product or service may face the risk of failure or include certain errors and omissions that open you to threats from customers or even cause shutting down of your company. Product liability is a major threat to business operations and accidents in any industry happen.
For instance, suppose your application that helps diagnose medical problems for its users happens to have a bug that showcases a high level of blood pressure in every user’s report, causing them to get the wrong medication and eventually having more problems, or worse, dying. Or for instance, if you happen to own a restaurant and a customer bites into his meal only to find a stone and breaking his tooth on it.
Cases such as these require you to get the product or general liability insurance. As a business owner, getting product liability insurance to deal with such a situation is the primary step to mitigate risks. Managing your product line and ensuring that the services you offer do not risk any liability issues is a major step towards protecting your business.
Having the right insurance coverage can help protect your company against common business risks. Make sure you carefully research all your options and find the necessary solutions for all your business problems.