Running a business can at times feel like trying to complete an obstacle course.
There is simply no shortage of internal and external challenges with which company directors have to contend.
Like business itself, the nature of risk develops over the years. Not too long ago, most threats seemed to be financial, operational, reputational or regulatory.
Our increasingly connected lives, however, have added fresh dangers. The likes of cyber attacks and climate change highlighted in a report published by one of the biggest insurers, Zurich, earlier this year can be added to the importance of meeting the healthcare needs of key personnel wherever they may be in the world.
However, some people believe the very idea of devoting time to weigh up the risks which they could face seems a little too much like tempting providence.
Yet the opposite is in fact true. Businesses which understand risk are better prepared and better able to read the road ahead, identify potential issues and determine whether to deal with them head-on or avoid them altogether.
The relationship between entrepreneurs and their insurance brokers is an integral part of that process.
Brokers should do more – much more – than simply take charge of renewing policies once a year and overseeing the payment of premiums.
Effective brokers become almost an extension of client businesses, taking time on an ongoing basis to fully explore how they operate, the risks which could arise and how companies wish to address them.
That risk tolerance is best summarised in one acronym – TRAP – which expresses how some firms might prefer to avoid or terminate particular risks. In contrast, others choose to reduce or even accept limited exposure to challenges. The remaining option is passing on or transferring risk in the form of insurance.
Throwing money at problems, though, can often only create problems of a different sort.
Understanding risk means ensuring that businesses don’t have unnecessary cover and, therefore, an unnecessary drag on their cash flow.
A frank and thorough assessment of a company’s risks and insurance needs allows brokers to have the kind of conversations with underwriters which can tailor policies more exactly to their circumstances.
It is a task which Broadway Insurance Brokers has undertaken regularly with its several hundred corporate clients.
If there is one lesson which we have learned, it is that the insurance requirements of no two companies are exactly the same.
Adopting an off-the-peg approach to insurance can open up the possibility of unforeseen and even existential risks which imperil a company’s future prospects.
The answer is not just buying insurance and more of it but working with brokers to put in place a strategy whereby insurance is one of a company’s principal risk management techniques.
Knowing when and how to use it properly, and when to employ alternatives such as staff training to ward off the type of hazards common to e-mail fraudsters can make a positive difference.
Just as it is imperative to identify risks before it’s too late, it is equally important that the very notion of risk doesn’t prevent businesses from doing what they do best.
Written by Karen Waugh, Client Executive, Broadway Insurance Brokers