Types of Business Risk for Small Businesses
No two businesses are the same, but small businesses, in particular, are unique in many different ways. One of the biggest ways they differ from their larger counterparts is the types of risks they face and the vulnerabilities they have. As a small business owner, one of the best things you can do to mitigate these vulnerabilities is by first understanding your unique set of risks.
1. Liability Risk
Every business, regardless of its size, is subject to liability risk. But because small businesses typically don’t have large monetary resources to fall back on, liability claims come at an even higher risk and price tag.
How to limit your risk: Ensure that your business is properly covered with the appropriate amount of liability coverage. If your business is one that falls into an industry with higher risks associated with operations, you may need professional liability insurance.
2. Business Interruption
Your business runs the risk of being disrupted at any given time. Whether it be from a natural disaster, a cyberattack, or a supply-chain mishap, disruption can cost your small business big.
How to limit your risk: Prepare and practice a business continuity plan so that should a crisis arise, all members in your organization know how to react quickly. You should also cover your business with business interruption insurance to help keep you financially afloat.
3. Security Risk
Cyberattacks are a huge threat to virtually every business in the world, but research has found that hackers generally tend to target smaller businesses because they are less likely to be properly protected than their larger competitors.
How to limit your risk: The best thing you can do to limit your cyber risk is to talk to a cybersecurity expert. They’re able to help you navigate your unique risks and exposures so you can get an adequate amount of software protection, as well as cyber coverage from your insurance provider. If you need some additional help determining how to lower your risk, you can check out a few of these tips from our cyber liability expert Ralph Pasquariello.