Risk management is a critical function of any business plan or business practice, and including risk management in both your daily routines/procedures and long term strategy should be part of your mindset. However, as with so many aspects of business ownership and management, many questions may remain. Here we’ll explore some of the basics and a few of the finer points of risk management, with a focus on small or growing businesses.
Components of Risk Management
While there are many different facets to risk management, for purposes of this discussion we’ll be focusing on property and casualty insurance and the role it plays in risk management for businesses. While closely related (and often offered as a combination policy), these are distinct things that play separate roles in business risk management. So what are they, and what do they do?
- The Property Insurance component of a commercial policy covers, as the name suggests, the commercial buildings in question and their contents in the event of a loss or damage. Typically this will include coverage for losses from theft, accidents, and natural disasters. As with most insurance policies, the cost, coverage, and premiums will vary depending on location, the nature of the business, and the value of the property being insured.
- Commercial casualty insurance, also known as commercial liability insurance, provides coverage and protection for your business against lawsuits for injury, property damage, negligence, or similar issues. This is the sort of insurance that will provide protection for your business if a customer is injured on your property, for example via slipping on a wet floor or some other accident. Your casualty insurance policy would take care of medical and legal expenses and settlement costs within the limits of the plan.
Both types of insurance are frequently required by lenders, landlords, investors, and other outside stakeholders, so it’s fairly common to see them offered as a combination policy which will contain both aspects in one policy and one premium payment. Such policies are a vital part of risk management for any business—if the worst happens the results could be catastrophic without property and casualty insurance.
Other Factors of Risk Management for Businesses
While property and casualty insurance is important, we should point out that it’s likely not the only kind of coverage your business will need. An important step in risk management is to identify the potential risks for your business and develop plans and policies to mitigate them—and this includes ensuring that you’ve got appropriate coverage for your business and business activities. General liability insurance may be necessary even with a property and casualty policy. For businesses with employees, worker’s compensation insurance is likely a must in case someone gets injured on the job. We don’t have the time or space here to explore every potential aspect of business insurance nor to identify which policies your business might need.
Expert Advice is a Must
Whether it be the ins and outs of business insurance or your long term business or personal financial planning, expert advice can save you time, money, and worry. At OmniStar Financial we adopt a personalized approach in guiding our clients to the right solutions for them, based on their own needs and goals. We’re here to illuminate the blind spots and help you find your own path to success, so get in touch today and we find the solutions you need.