Managing a Business |
05 May 2015, 12:00
Bryan Verpoort, Head of Corporate & Business Insurance at Standard Bank explains the difference between theft and fidelity cover and why you need to insure your business for both.
4 Risks you can prepare your franchise for now
Your business may have insurance, but are you adequately covered? Bryan Verpoort walks you through the lesser known facts of your risk insurance.
Related: Advice for first time franchisees
You’ve worked hard to get your business to where it is today and have invested in risk cover to prepare your business for any eventuality. But are you 100% certain that you have the right type of insurance to suit your unique business needs, and are you actually covered?
Here are four unforeseen risks to consider when assessing your current business insurance and how you can mitigate them:
1. Staff theft and fraud
As a business owner, you want to trust the people that help you run your company. One of the problems with growth – particularly rapid growth – is the necessity to hire many new employees quickly.
The result is that you don’t always have the time or capacity to analyse whether the right types of managers and staff have been appointed. Often, the business owner finds out too late that an untrustworthy individual has been hired, but by then the company has already been defrauded.
While this is often a real threat for growing businesses, there are steps you can take to ensure that internal theft and fraud doesn’t affect the performance of your business, or worse, result in devastating losses that might cripple the company.
2. Cash on your premises
The biggest risk for businesses is cash. If your small franchise business is located in a formalised retail environment you can probably afford to purchase less cover, as theft in retail centres is generally limited to the bigger businesses that carry high value stock items, such as cellphones and jewellery.
For a stand-alone business that is a cash-oriented business, such as a fast food franchise or fuel retailer, the problem arises with the handling of that cash.
The handling and transferring of cash from your business to your bank can be quite expensive, and businesses do not always put cash insurance in place to mitigate the risks. These types of businesses, however, will often find that the most common type of cash loss will be due to fraud or staff theft.
Pay particular attention to how efficiently your cash is handled and transferred to the bank. Use a professional company to handle this risk and assist you with the safe storage of cash on your premises.
There are also cash deposit devices available that will transfer that risk to the bank and ensure that your cash remains safe.
Take precautions to ensure that you both reduce the risk and also, when you do have to claim, that you will be covered because you have taken adequate steps to minimise the risk.
3. Load shedding
Your business is no longer a start-up and your company concerns have become more complex. Factors such as load shedding can have a devastating effect on your business, which is why you should speak to an expert to help you determine where your business risks lie and what type of cover you need specific to your business.
For example, business interruption cover does not mean the business is covered should production be interrupted due to load shedding. This is because business interruption follows a trigger event, and must be as a direct consequence of something, such as a loss of profits due to an event such as fire, hail or theft.
If your business was affected due to load shedding, such as the loss of perishable stock, you wouldn’t be able to claim for business interruption as the loss of power was due to an indirect consequence.
4. No ‘one-size-fits-all’ business cover
Sometimes business owners are led to believe that the insurance they have purchased will cover them in all instances, only to find out too late that this isn’t actually the case.
We take the approach that your business needs are unique and we advise our customers on exactly what and where they are covered, as well as what steps they should take to minimise risk in those areas where they may not be covered.
Insurance may not cover you in all instances and businesses need to plan for all eventualities. Your risk specialist can help you determine these areas so that you and your management team can put the right precautions in place to protect your business.
Our unique insurance service offering
Buying insurance cover based only on low prices may leave your business exposed to risks that you thought you were adequately covered for.
Our process is to focus on understanding what it is that the customer needs specific to their segment; we identify what type of business you are operating, and then provide the relevant product based on your business requirements.
Related: Checklist for choosing a franchise
It’s important to us to cut out what won’t be necessary for your business and rather provide you with a solution specific to your business requirements.
Standard Bank’s positioning is to embed value in our customer offerings and invest time and expertise in finding the right solutions for you. This means not only looking at the right solution fit, but helping our customers to understand and mitigate their own business risks.
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