Small and medium-sized businesses face an ongoing cycle of overcoming obstacles and minimizing risks. With different priorities and risks compared to large-scale companies, smaller businesses must be adept at mitigating these challenges if they wish to succeed. The level of risk tolerance in small and medium-sized businesses is influenced by various factors, including industry type, business environment, and ownership structure.
As published in Home Improvement Retailing, Westland’s own Luc Romaniuk provided the four key areas of risk and insurance that need to be considered to help mitigate risks.
Cybercrime, when compared to other business risks covered by insurance, is a newer threat that’s evolving as attackers become more creative. A retail business could be incredibly impacted if it were subject to a ransom demand after its computer system has been hacked.
However, there are additional risks that owners should be aware of. These include increased exposure to privacy liability depending on the amount of client information stored, and the potential to lose years’ worth of data if the business computer is hacked and ransom is demanded. Recovering lost data or having to pay a large ransom can be debilitating for small businesses.
Another complexity brought on by ransomware attacks is determining if it’s more cost effective to pay the ransom. If it is, in many cases the bad actors want payment in bitcoin – a currency that many don’t fully understand. Working with an advisor and having cyber insurance are two ways to help mitigate these risks.
A common example of a cyber attack is phishing, where an employee receives a legitimate looking email from a bad actor requesting a fund transfer and they comply. As the business owner, you could be out money because of this mistake. On top of annual staff training, having a robust cyber insurance package can address these risks. This includes a professional cyber team who will work for the small business to try and resolve the incident, cover unforeseen costs, and help get them back up and running as soon as possible.
Business interruption coverage is very important, yet it’s often a misunderstood and undersold area of coverage for businesses. For example, if a retail store suffers a catastrophic event like a fire and they lose their buildings and stock, having the appropriate property insurance for those damages means they can be replaced. However, getting the business rebuilt and restocked takes time. With supply chain delays and a labour shortage, this may take longer than expected. Business interruption coverage can cover the lost profits, the extra expenses to get the business up and running again and, in some cases, the staff payroll expenses to get by while waiting for the building to be replaced.
For small to medium-sized businesses, it’s critical to review the coverage limits on the existing policy. The building and contents limits are very important, and, with the increased cost of labour and materials, what was sufficient a couple of years ago likely is not today. Small business owners should prioritize reviewing these on an ongoing basis and adjust them as needed to avoid an unhappy outcome in the event of a claim.
Stock is seasonally dependent and constantly fluctuates and should be looked at often to ensure the business is fully protected in the event of a catastrophe. In some cases, an insurance policy may allow for additional coverage for those peak seasonal fluctuations. Ensuring materials are covered while being delivered is another important coverage to consider. Material costs are much higher today than they were pre-pandemic, so ensuring the cargo insurance limit is sufficient is vital in the event of an accident involving a delivery vehicle. Keep in mind, an auto policy will not cover the inventory being hauled.
Commercial General Liability
Retail businesses face various exposures on the buildings they own and occupy, the products they sell, their installation crews as they work, and even o their vehicles when they deliver building materials to customers. Having a commercial general liability policy is crucial to provide coverage for bodily injury and property damage to third parties during business operations.
For business owners, protecting their business from risk is a critical piece of sustaining it for the future. Working with a broker who understands the complexities of today’s ever-changing risk environment will save them time, provide peace of mind, and protect them from costly surprises.
To comprehensively mitigate risk, it is important for businesses in any industry to have the appropriate insurance coverage. Given the current trends and emerging risks that businesses are now facing, it is essential to partner with insurance advisors who can help ensure that your business is adequately covered. This will allow you to concentrate on growing your business for the future without having to worry about the financial impact of unexpected events or accidents.
Connect with us to review your current insurance policies, discuss your unique risks and operations, and find the perfect insurance policy for your business.