There is much unpredictability for a business owner in South Africa today. Policy uncertainty, rising fuel costs, increasing interest rates and Load-shedding are just a few of the examples of things not within one’s control.
To help lower stress levels, Karen Rimmer, Head: Distribution of PSG Insure, shares four tips on what business owners can do to reduce business risk and assist in future-proofing their businesses.
1. Plan for the unexpected – ensure that you are adequately insured
“Business insurance offers security against claims and losses that the company cannot carry themselves,” explains Rimmer. “Without business insurance, business owners may be forced to pay for costly damages and legal claims out of their own pocket. Depending on the scope of the loss or liability, this could drastically impact the business’ finances, and the business could find itself in a crisis. Business insurance can provide cover for material damage at the business’ premises and contents, as well as offer protection against financial losses such as loss of gross profits or revenue.”
2. Consider the impact of modern risks like cybercrime
“All companies today make use of computers to interact with valuable electronic data,” says Rimmer, “and every business uses e-mail, so protection from the possibility of a cyber-attack or event is crucial. Cyber events can be quite costly and often harm a company’s brand and reputation. Businesses may even be held liable for damages stemming from the theft of a third-party data breach.”
Cyber insurance is important to protect businesses against the risk of cyber events, including those associated with network security and media liability. Cyber-risk coverage can assist in the timely remediation of cyber-attacks and related incidents.
“An example of a cyber-attack that can impact most businesses,” elaborates Rimmer, “is electronic fund transfer fraud. These attacks involve fraudulent online payments where an emailed invoice is intercepted, and the hacker directs the payment to a different account. Losses can be substantial, especially in the case of property transactions with clients losing deposits or final payments after inadvertently sending the funds to a scammer’s bank account.”
3. Key man insurance cover allows you to run your business with confidence, knowing that it is covered if unforeseen circumstances occur
During recent interviews with PSG advisers, Rimmer explained that one of the top risks revealed was the loss of key staff.
“Key man insurance protects a business against the financial consequences should a key member of the business die, become disabled or suffer a critical illness.”
This could be an owner, an executive, or an employee. Key man insurance cover is equally integral to the protection of businesses and the livelihood of employees. Just as personal accident and health cover is essential in personal cases, should one become disabled or critically ill.
4. Keep your powder dry for expansion opportunities
Investing to build up capital allows businesses to take advantage of growth and expansion opportunities. It is important to invest business capital for the optimal period and take on acceptable risk to grow and safeguard the investment.
“Uncertainty is the only certainty there is, so the saying goes! So, it’s therefore always a good idea to contact a financial adviser, who is well positioned to help manage potential risks and build a business continuity plan to future-proof the business financially,” concludes Rimmer.
Article credit How to future proof your business financially (fanews.co.za)