Business risk management

What is business risk management?

Business risk management involves identifying, assessing and mitigating risks affecting a company’s operations, finances and overall success. It’s an evolving process as a business grows and faces new challenges.

How do businesses manage risks?

Putting together a risk management plan is essential for your small business’s long-term success. Risk management planning also involves implementing preventative measures and contingency plans to minimize losses.

Here are the basic four steps for business risk management planning:

• Identification. The first step involves recognizing potential risks, which can be internal (like financial mismanagement) or external (like market volatility).
• Assessment. After identifying risks, businesses assess their potential impact and probability. This helps prioritize which risks to address.
• Mitigation. Next, businesses develop strategies to reduce or eliminate these risks. This might involve diversifying investments, purchasing insurance or implementing safety protocols.
• Monitoring. Risk management is an ongoing process. Businesses continually monitor and reassess their strategies as circumstances change.

Primary categories of business risks

How do you identify risk? The major categories of business risks include:

• Property damage claims
• Liability claims
• Loss of income
• Cybersecurity breaches

Think about your daily business operations and consider the types of risks your business may face. How would risks arise during normal business activity? Once these and other risks are identified, the business has a better idea of the proper insurance policies that cover potential losses.

Insurance for managing business risks

Small business insurance is one of the best ways to protect your income from things that could go wrong.

Here are a few common coverages business owners have to reduce risks.

• General Liability insurance offers protection against various accidents and potential lawsuits that can arise in the daily operations of a business, such as bodily injuries to non-employees, damage to another person’s property, reputational harm and associated legal costs.
• Professional Liability insurance helps protect you when you are accused of not having done your job correctly.
• Commercial Property insurance covers a business’s physical assets, such as inventory and buildings, against damages like fire, wind and vandalism.
• Workers’ Compensation can help cover expenses for medical care, lost wages and other costs after a workplace injury.

Each business is unique, so talking to an insurance expert helps them get the best coverage for their needs.

Let NEXT be there for your business

At NEXT, we’re 100% dedicated to small businesses. With 24/7 access to your plans and policies, you’ll always be prepared for whatever comes your way. All you have to do is apply online and follow the prompts to access your custom instant quote in 10 minutes.

Start a free instant quote with NEXT.