As we begin to emerge from the pandemic, business owners are finding themselves having to adjust to a very different business environment. There is a plethora of complex new risks entrepreneurs must deal with if they wish to steer their business successfully into the future. In addition, many businesses must still contend with many of the same risks that existed before the pandemic started.
Philippa Wild, Santam’s head of Commercial Underwriting, says, “There are so many challenges for business owners right now, including stressed staff and stretched cash flow. Both technologically and systemically, this has resulted in significant changes in our behaviour and has had a profound impact on both our clients and the insurance industry. It is imperative that businesses keep their policies up to date and have adequate risk mitigation policies in place.”
The risk management practices every business should have
No matter what type of business you own, it is always important to consider what could impact your business detrimentally. From here it is important to develop risk management and safety protocols to help limit the impact and make sure you have adequate and appropriate insurance cover in place. Every business is different but, as a rule, maintenance, good digital hygiene (having strong password policies and robust digital safety protocols in place) and strong fire safety protocols are a must.
What to consider
The pandemic has increased awareness of the need for business owners to review their policies more frequently and keep their intermediaries abreast of any changes in circumstances. While most businesses have tended to renew and review their policies every 12 months, the pace with which things have changed in the past 24 months has made it clear that a more regular review of policies is paramount.
Wild says, “A large part of any business owner’s risk management function is to disclose all pertinent changes to his or her intermediary.
When this is done, it opens the door for the intermediary to appropriately notify the insurer and thus avoid a situation where there is a cover shortfall.”
The most common business risks
At Santam we have identified the following as some of the most common business risks an organisation will face across a variety of industries:
- Fires are considered the number one risk to businesses. In the current climate, one large fire could be the catalyst that closes a struggling business permanently. All it takes is a simple lapse in fire safety procedure. For example, if a generator is not maintained, its failure could cause the automatic sprinkler system to fail, which in turn might result in problems containing the fire.
- Cybercrime costs South Africa R2,2 billion per year. It can cost small businesses anywhere between R50 000 and R250 000, if not more, to recover from cyber attacks. Any business that uses some type of digital technology is vulnerable to such attacks. This is why it is important to implement good cyber risk management practices and appropriate cyber insurance cover, often available as a package in the market. This will help protect your business against losses such as business interruption, ransomware and forensic costs, caused by a cyber malware attack.
- The accelerating rate of change refers to how quickly things can change. Business owners need to evaluate the impact of new and emerging risks and how their own business’s risk profile has changed. For example, with more employees working from home (with company assets being transported and no longer only kept securely on site) there is an increased risk of cybercrime, loss of and damage to company equipment. Then there is also the change in occupancy experienced at your premises now that fewer employees are on the premises less often.
- Business processes and reliance on business partners: Any risk management strategy needs to consider how your business relies on business partners and supply chains. If their risk environment is changing, are they adequately protected, and risk managed? Business owners should have contingency plans in place that they can discuss with their intermediaries, and should purchase insurance where necessary.