When you are running a business, you expect it to be exciting and profitable. However, running a business also means that you will inherently assume some level of risk.
Whether it be from a slip-and-fall accident or a dispute with an employee, businesses are exposed to all sorts of unwanted litigation. As a business owner, you want to be aware of the potential risks your business faces and develop a tailored risk management strategy to help mitigate them.
Elements of a risk management strategy
An effective risk management strategy looks different for every business. However, there are a few elements that a robust risk management strategy will generally have.
You can buy insurance policies to protect your business from costly occurrences. There are many kinds of policies for businesses that provide different kinds of coverage. Some common policies include:
- Business owners policies: This kind of coverage may provide liability protection from third-party claims and other occurrences.
- Employee practices liability insurance: These policies cover you from claims such as discrimination or wrongful termination.
- Workers’ compensation insurance: These are policies that protect you from employee claims about job-related injuries. They are especially important for any businesses that have employees participate in potentially dangerous work activities.
Relevant contracts and agreements
Well-drafted contracts can provide protection for the most important parts of your business. From non-disclosure and vendor agreements to business formation documents and partnership agreements, well-drafted contracts can play a huge role in protecting your business.
While the above-mentioned elements all help to insulate your business from risks, it is important to have on-going processes in place to identify and address risks.
For a smaller business, this process could be as simple as a monthly meeting to discuss risks. For larger businesses, assembling a crack team of experts with explicit responsibilities might be a better method.
Putting these processes in place can help you stay agile in your business environment and continue to protect your business as best as you can.
Developing a strategy
Coming up with a risk management strategy is an important part of managing a sustainable business. A business attorney can be a resource to help develop a risk management strategy that best suits your business.