No more risky business: Insurance and risk management for small businesses

The long-term health of your small businesses depends on many factors, including how well you and your team can navigate the unexpected and unforeseen. A comprehensive risk management strategy is essential to navigating uncertainty and as such should constitute a key part of your formal business plan.

If you have not yet integrated a risk-mitigation perspective into your long-term vision, read on to help you start thinking about striking the right balance of insurance and risk-management strategy.

What does it mean to mitigate risk?
Individuals, businesses and governments are constantly assessing and responding to risks of all kinds. At work, a risk management strategy can be broken down into two main components: planning and implementation.

You might start by asking yourself about your present insurance situation:

• What is my insurance cover?
• Who can I speak to at the insurance company about questions or claims?
• Where do I file claims?
• Do I understand the terms and conditions of my policies?
• When was the last time our business held an annual review with the insurance company?

The Australian government has compiled a useful guide to the world of business insurance.

Types of insurance
Various insurance covers may be relevant to your enterprise, while others may not be. An insurance broker can help you with specific questions about which are most essential for your enterprise, from a wide range of products that includes:

• Property insurance
• Public liability insurance
• Professional liability coverage
• Commercial vehicle insurance
• Business interruption coverage
• Cyber insurance policies
• Workers' compensation

Good news: a shifting insurance landscape
It can be difficult to decide how much to invest in risk management. Taking on the expense of insurance premiums may feel like an unnecessary cost. It's tempting to put off emergency planning — in particular, budgeting for insurance premiums that would cover unforeseen fire or natural disaster — to instead focus on more immediate challenges.

The frustratingly high expense of insurance policies is a big reason many small-business owners look away from risk mitigation strategies. This issue is increasingly being addressed.

In September 2021, the Insurance Council of Australia (ICA) publicly said it will take concrete actions to address the affordability and availability of key insurance products for small business owners. A Business Advisory Council has been created to meet regularly and craft solutions that address these challenges.

The Council is comprised of a cross-section of business owners and various insurance professionals. The board will work in concert with and be accountable to various industry associations, stakeholders and regulatory bodies. Among the top concerns to be addressed are professional indemnity, public liability and business interruption cover.

If you would like to discuss your risk management strategy, the experienced professionals at WMC Accounting would be pleased to assist you. We are here to help your small-to-medium sized businesses survive — and thrive — during any challenges. Contact us today to learn more about how we can help.