There's "no one size fits all" template for ensuring an insurance programme meets every requirement for every business.
As a business owner or director you will need to work closely with those in your senior management team and a trusted professional adviser to tailor any risk management and insurance programmes to meet the needs of your business. But lets first go back a step.
In the previous two posts we spoke about why insurance and risk management matters, and that it often needs a rethink to set the right foundation for enabling growth. How do you go about making sure your plans meet your needs? Here's a simple three step system you can work through with your team to ensure its efficacy:
Step 1. Identification Phase - What do you need to protect?
Some risks will threaten the survival of your business whilst others, although undesirable, will have less impact. During this stage you should establish what assets - both tangible and intangible - you must ensure are protected.
Its important to:
- Understand the business requirements - now and in the future
- Consider assets beyond buildings and stock, such as key personnel, reputation and brand. Think through: the potential impact of a loss of data; your ability to relocate or replace plant and machinery; how robust your suppliers are; and the strength of your relationship with key customers
- Review or create a risk register, which will inform your decision making and provide a checklist for the final programme
- Consider talking to and or contracting a specialist risk management company.
Step 2. Evaluation Phase - What are the threats to your business?
Once you have established what you need to protect you can begin to consider what threatens these items.
Its important to:
- Evaluate the risks. Identify the real risks and threats, which will go beyond the traditional fire, flood and theft.
- Evaluate risk appetite. What risk can your business potentially manage and how would an impact here affect your strategy?
- Consider risk mitigation. What are the available options?
- What risks are to large and need to be transferred to an insurer?
Step 3. Control Phase - What are the potential solutions to the threats your business faces?
This phase is about ensuring that you have coverage and mitigation for risks, without gaps or overlaps. Often this final step will need the most assistance from a broker/adviser to understand what is available and what gaps that product may leave behind. (Remember these policies are often large and complex and the right advice will save you in the long run)
Its important to:
- Consider both insurance and non-insurance solutions
- Assess the credentials of your professional partners
- Know your risk mitigation programme
- Own relationships with your adviser, insurers and other partners. (Remember your all part of team)
- Take a proactive approach to claims. Notify your adviser, mitigate further loss and manage the process and timeline.
As the previous post about rethinking your needs mentions insurance is often one of the largest commercial contracts you may enter into and there's some common barriers to getting it right. Insurance is about protecting a companys balance sheet by transferring risk to a secure partner, to do this you need a robust and fit for purpose programme that meets the real world needs. One of the common limitations is the perception of its worth: Remember Think Value - Not Cost.