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Top insurable risks to business growth and how to manage them

Risks to business growth are similar, regardless of the size of your insurance client’s business (or your own business, if you’re self-insured), whether there’s six or 6,000 employees. Growing a business typically means adding more employees, more equipment and inventory, a larger location…all of which add risk.

Expansion can have a major financial impact for a company of any size. The right kind of insurance can help grease the wheels for growth and market expansion, providing important financial protection to minimize risks to business growth.

A recent Aon survey uncovered the top risks on a global level; we’ve used their data as a starting point, then allowed other experts to weigh in. In all, we’ve uncovered the top 12 risks to business growth  While it’s important to note that these risks vary from industry-to-industry, overall, these increased risks are important for your business owner to manage as part of their growth strategy.

The key risks to business growth

We’ve named the top risks for a growing company to be:

• Hiring an employee. As you know, your business owner isn’t only responsible for the safety of their employees while on the job, but they’re also responsible for their employees’ actions while on the job. Encourage them to hire carefully for skillset and culture fit, taking the time to call references. Remind your insured it’s time to update not only their workers’ compensation coverage when hiring new team members, but also their EPLI (employment practices liability insurance). As they’ve grown, has their scope of operations and payroll changed as well? This too may require modifying their work comp policy.
• Incurring reputational harm. Unhappy, over-reacting customers out for revenge. Fake news. A valid injury from your product or service. The more customers your insurance client has, the greater the risk that someone will be injured or simply become disgruntled, and post on their opinions on social media and review sites. Many times the injury incident is real, but it’s blown way out of proportion. Help your client create a reputation risk control strategy in place that can curb an incident from becoming a crisis.
• Adding new equipment or furnishings. More than half of the businesses responding in the Aon survey planned to add new contents. Do your business owners need to update their limits to include these new items?
• Recovering from property damage. Fire, earthquake or certain weather events: The property coverage in your client’s BOP helps them get back to business faster.
• Moving to a new location. Help your client survey the security and safety issues that need to be addressed in their new location. Upgrading their property coverage in their business owner’s policy is also crucial.
• Regrouping after a burglary or theft. Most BOP insurance can help pay to replace stolen business property; Employee Dishonesty coverage is usually available in the BOP.
• Selling a new product. According to the survey, more than one-third of growing companies plan to introduce a new product, making this the time to update their product liability insurance portion of their GL.
• Making restitution for a product that caused injury or damage. The product liability portion of general liability insurance can pay for legal expenses associated with damage from goods you sell.
• Selling a new service, handling a complaint or contract dispute. As their consultant, you’ll want to review with them their professional liability coverage to ensure it’s adequate for their expanding services. Claims related to client dissatisfaction such as alleged work mistakes, negligence or undelivered work are typically covered under professional liability insurance.
• Handling a customer injury. General liability insurance can help cover costs when customers are injured on business property or off-premises, from business activities happening elsewhere.
• Becoming a cyber target. When your insurance client was just a mom-and-pop shop, their risk for cyberhacking was relatively low. However, as they grow, their need for an IT infrastructure and greater security increases. Now’s the time to review their cyber security measures and coverage, protecting not only your client, but also their customers’ and employees’ data.
• Restarting after a business interruption. What would happen to your client’s business if severe weather, earthquake or other manmade crisis closed them down for weeks or months? Help them create a business continuity plan to identify key ways to minimize financial losses.

 Related:  Do you have a business continuity plan?

The big picture: How you can help your commercial accounts manage risks to business growth

Besides having adequate coverage for their business risks, there are a few more strategies you can help your commercial accounts incorporate in their risk management and loss prevention efforts. The Small Business Administration lists these best business practices, some of which we’ve already covered: Hire right. Enhance safety in your facility. Check your computer security. Stay compliant with constantly changing federal, state and local regulations. We also add these:

• Define acceptable risks. Which risks can be termed as positive, with little downside? If there is a downside, is the financial risk manageable?
• Prioritize risks. As growth strategies are weighed, which add risks that are most likely to occur? Which add risks that will have the biggest impact?
• Determine the best ways to minimize risks. Evaluate possible scenarios that can occur with growth. Establish contingency plans to mitigate risks wherever possible.
• Get coverage for key insurable risks. Help your client determine which risks are simply too great or too costly to self-insure, such as an on-premise accident. Then help them determine which coverage limits and enhancements are right for their business.
• Create risk management plans and procedures and train employees. Help clients create strategies and training programs for all employees, familiarizing them with the company’s risk management processes.
• Monitor and review all risk data. Where have injuries occurred? Where have losses occurred? Encourage your client to make it a practice to continually review your risk management plan, always on the outlook for both new and obsolete risks.

Related: How to minimize risk by creating a business continuity plan

Resources:
5 Best Risk Management Strategies
3 Growth Risks That are Harmful to Your Business’s Health and How to Cure Them
5 Risks for a Growing Business, and How to Manage Them
6 risks small business owners face when they grow
Top 6 insurable incidents small business owners faced in 2016

This article first appeared in Arrowhead’s Tribal Program blog. It has been modified to include best practices for ACM’s  self-insured clients and insurance companies.