Women’s Venture Fund
Sure you strive to be a risk-taker with the creativity and determination to live your entrepreneurial dreams. You’re even willing to fail to learn from a mistake. That’s great. Go for it.
We’re talking about another aspect of risk that business owners need to be aware of—those risks that are inherent in running an enterprise and can determine its success or failure. Here are five risks that are common to virtually every business that entrepreneurs must not only be aware of but must adequately address:
- Property losses from physical damage or criminal activity.
- Business interruption losses—any interruption to your operation, i.e., a fire, that prevents you from conducting business.
- Liability losses—any damage or injury to others caused by your company
- Key person losses—what happens when you or a key person becomes sick, disabled or dies.
- On the job injury to employees.
You should determine your level of vulnerability to each of these types of risks; then derive the costs to protect your company against them.
Your next step is to acquire the right type of insurance for your business sector: The most common types are:
- General liability insurance covering injury to a third party.
- Product liability insurance which covers the expenses related to injury or damage caused by a defective product
- Professional liability insurance which is similar to product liability but for service businesses. Often referred to as “errors and omissions” insurance, it protects against malpractice, errors and negligence.
- Commercial property insurance which covers property losses and business interruption losses.
Lastly, prepare contingency plans to mitigate risks such as installing a security system to eradicate property losses; establishing safety protocols to protect employees; and creating a succession plan to safeguard your business in the event of the loss of a key person.
Review your risk management plans at least twice a year to make sure it is aligned with the current state of your business.