Protect yourself
 from the unforeseen

Risk is a fact of life. No business is immune from the risk of an unwanted, unexpected event disrupting their activities, even threatening their very existence. No business can be 100 per cent risk free. But every business, from the smallest ‘one man band’ to the large multi-national to a local authority, can and must assess the risks they face and take sensible, practical steps to reduce and manage them. This is where insurance comes in as a valuable way of not only helping firms recover financially when things go wrong, but also helping prevent the worst from happening in the first place. As the saying goes, ‘failing to prepare is preparing to fail’. A cliché perhaps, but failing to identify, minimise and manage risk could have dire consequences for any business organisation regardless of their size.
    
Take an event such as a flood, or rather several floods because the risk of serious flooding is becoming more frequent in the UK. A recent report from the Environment Agency estimated that last year’s record-breaking wet weather (the second wettest year in the UK on record and wettest ever in England and Wales) cost the UK’s economy up to £600 million, when you include lost working days, disruption to transport and utility links. Not only can a flood damage your building, equipment and stock, but also force you into temporary premises while your property is being repaired, which, in case of a severe flood can take months. Insurance can cover all of this – from repairing your premises, and replacing ruined stock to paying for alternative trading premises so that you can carry on with your business.

Everyday risks
Some threats, like fire and theft, are obvious. In 2012 insurers paid out £800 million – equivalent to just over £2 million every day – to businesses who had suffered a theft or a fire. And of course it is a legal requirement for any organisation with employees to have employers’ liability insurance and third party motor cover if vehicles are used.
    
But there are many other risks that are part of everyday commercial activity that can be equally disruptive. The departure of one of your key employees, the failure of one of your trading customers to pay you, and the risk of losses due to employee dishonesty are all examples of the risks that insurance can protect against.

Prevention is better than cure
As well as providing financial security when things go wrong, insurers, as experts in risk management, can help prevent the worst happening in the first place by working with organisations to identify the risks they  face and help them to take precautions to reduce and in some cases eliminate them.
    
There is no ‘one size fits all’ approach to risk management. The risks and requirements will vary between different organisations – a public service body providing a wide range of services won’t have the same needs as a small business, and a self-employed individual will have different requirements to a multi national.
    
Effective risk management will make it easier to obtain competitively-priced insurance, as an organisation that takes risk management seriously is much less likely to be making an expensive claim than one that leaves things to chance. But it also makes good business sense – it can reduce the costs that insurance does not cover, such as the cost of replacing staff and giving sick pay, bad publicity, inconvenience and fines, for example for any breaches of health and safety requirements.

Good risk management
Risk management involves an assessment of the risks your business faces – from the layout of the office to manufacturing and distribution processes.
    
For every risk your organisation faces you should draw up an action plan, so that if problems arise, the damage and disruption can be minimised. The plan should include key procedures for employees, contingency plans to minimise injury and business disruption (for example, an alternative trading site) and details of important contacts, such as emergency services, to kept in a central place.

Health and safety
You are legally required to know what health and safety hazards and risks exist in your workplace and take steps to eliminate or reduce them.
    
A clear statement on health and safety policy should be in place, with a senior person responsible for ensuring that policy is implemented.  Your business also needs a risk assessment process that identifies any significant risks, such as working at high altitudes or the use of hazardous substances such as chemicals and who is at risk, such as employees, sub-contractors and the public.

Clear safety information for staff and staff training can help to minimise risk, as can an accident reporting and investigation system aimed at preventing recurrences.

Occupational health
It is often said that an organisation’s most valuable resource is its employees. The costs of lost productivity, sick pay, replacing lost workers and absenteeism can be substantial, time-consuming and bad for staff morale. Promoting the wellbeing of your employees can help prevent illness and injury, reduce absentee costs, and make employees feel valued. Your insurer can help you develop a cost‑effective occupational health programme, including workplace assessments, health screenings, access to occupational health experts and stress management.
    
Vocational rehabilitation can help employees speed their recovery and return to the workplace more quickly. It can include physiotherapy, counselling and workplace adjustments and adaptations.

Reducing the threat of flooding
A flood can have a devastating impact on any organisation and its local community.  The flood risk in the UK is predicted to worsen in the future. The Environment Agency estimate that about 175,000 businesses in England and Wales are at risk of flooding, and that does not take into account the threat of localised flash floods caused by extreme heavy rainfall that can strike anywhere at any time.
    
While the primary responsibility for ensuring adequate flood defences rests with government, organisations that prepare for flooding will significantly reduce the disruption and costs and recover much more quickly through measures such as using dry flood proofing products against risk of shallow floods, and wet proofing products for deeper floods; and using flood‑resistant materials in any new buildings or building alterations. Organisations need to, wherever possible, have access to temporary alternative trading premises so that they can continue to operate while nay repairs are being carried out.

Tackling the crime risk
Ensuring that your property is secure against intruders should be obvious. But every week, insurers deal with claims for theft and vandalism caused by the obvious being overlooked. Good security starts with ensuring that doors, especially final exit, are in good condition and well secured. Windows need to be sufficiently glazed, and possibly protected by shutters. Electronic security measures, such as intruder alarms (preferably connected to an alarm receiving centre), CCTV systems and access control locks and intercoms work and that your staff understand them.
 
Reducing fire risks
The risk of fire can come from within your organisation, from hazards such as the use of flammable materials, and from outside through arson and malicious damage.

You are legally required to carry out an assessment of the fire risk. To do this you should access fire hazards, such as sources of ignition, hazardous processes and flammable materials. Identify the people in your organisation who are more at risk. Wherever possible, remove or reduce the risk, for example by ensuring that potential fire hazards such as rubbish aren’t left to accumulate, and reviewing fire detection and fire-fighting systems. You should have an emergency plan in place and test it regularly. This should include reviewing escape routes and providing fire safety training to staff. Your premises should also be secure to deter arsonists.

Staying protected
Risk management is not a one-off exercise. It is not a case of ‘done that and move on’, but an integral part of any organisation’s business plan. However, it needn’t be an all-consuming, laborious exercise. After all, the whole point of risk management is to ensure that an organisation reduces the risks of the unwanted event disrupting its main activities, and that if the worst does happen it can recover and get back to what it does best as soon as possible. Not every risk can be totally eliminated; no organisation can say that they are 100 per cent crime or fire-proof for example, but an organisation that has an integrated risk management plan that is regularly reviewed and updated is much more likely to develop, thrive and survive adversity.

Further information
www.abi.org.uk