Start Up Insurance – What is Risk Management?

Understanding the various types of insurance on offer, let alone deciding on a supplier can be a daunting business for small companies. The Business Insurance Service can help you navigate through this process, providing a one-stop shop for all your risk management and insurance needs.

What is Risk Management?

Put simply, risk management is the identification, and evaluation of risks facing your business. When risks are identified, procedures are then put in place to mitigate their impact.

Risk is unavoidable and present in our everyday world. We practice risk management by instinct and it becomes second nature to us. The fact that you have taken the commendable step of starting your own business shows that you understand that often, to create accelerated rewards, we have to take on risk. This type of risk taking is positive. A number of risks businesses face however, can have catastrophic consequences if they are not managed properly.

Why is it important?

This may sound like a silly question but too often companies rush to insurance as the answer to their risk management needs without actually understanding what risks their businesses actually face. The start point for any decision to take out insurance is the understanding of the risk that you are seeking to mitigate. A good first step for any business owner is to undertake this exercise themselves. List all the risks you face, prioritise them, and then look at mitigation steps. For example, you may worry about flooding. Leaving aside insurance, is the risk great enough that you should have a business continuity plan? You may worry about human error causing an injury or loss. Again, leaving aside insurance should you therefore have strict procedures laid out in writing?

Good insurers are also skilled risk managers. They can help you through this process too, identifying things you may not have considered as well as other mitigating steps that will help you reduce the risk. This is beneficial all round. A business that practices risk management well is likely to be better controlled. A better controlled business is less risky. Less risky business means less losses for insurers and less losses for insurers mean lower premiums for you!

What does the law say?

The law states that you must, in certain circumstances, have two types of insurance:

  • Employer Liability Insurance (EL) if you employ any staff
  • Commercial Motor Insurance if you operate motor vehicles within your business.

All other types of insurance are for you to consider on their merits.

Business Insurance Service (www.businessinsuranceservice.co.uk) is here to help.

Call us on 01273 789 979 or email us at hello@businessinsuranceservice.co.uk

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