Managing Risk

A clumsy client trips on the antique oriental rug in your office, falls, and considers retiring on the proceeds of this misadventure. Or, your product is swallowed by a customer's dog, with the predictable ill effects. Or, your inventory gets fried in a warehouse fire — along with your computer, which held all your accounts receivable records, among other irreplaceable files. To avoid losing a lot of sleep, evade these potential pitfalls and manage your risk.

Managing risk can be done in several ways. Once you've identified a risk, you can elect to:

• prevent it — by, for example, practicing good fire safety
• avoid it — by, for example, subcontracting a part of your product manufacturing that involves hazardous materials
• spread it — by, for example, backing up your computer files and keeping the copy at a separate location
• absorb it — by assuming that certain losses are an acceptable cost of doing business
• transfer it — by sharing the risks with an insurance company

In most cases, risks that you can't readily handle or predict are best transferred to a reliable insurance carrier. You are no doubt familiar with personal insurance, such as homeowner's, personal auto, life, disability, health, and home business owner's. But if your business is located away from home or if it's home based but growing fast, you'd be well advised to see a business insurance professional and evaluate the cost and benefit of transferring your risk via a comprehensive insurance package designed to protect your particular circumstances.

This sounds more complicated than it actually is. Insurance companies have been at it for centuries and they've thought of risks you never dreamed you had. So, they're well prepared to protect you from most perils via a standard policy at a reasonable price. You will be able to keep that price down by electing to take the highest possible deductible you can afford. An annual review of your business insurance with your agent will assure you that you still need what you're paying for and that no new risks have emerged, due to the growth or nature of your business, that are not covered in your package policy.

Business insurance types fit into a concise menu from which to choose. There are three basic types of policy coverages:

Liability	Special	Property
General Liability	Business Interruption	Auto Physical Damage
Product Liability	Plate Glass	Comprehensive Damage
Auto Liability	Credit Life	Crime Coverage
Workers Compensation	Surety Bonds	Fire & Extended Coverage:
Umbrellas		for hail, vandalism and malicious mischief
		Inland Marine