As a business owner or operator, your work is about taking a series of risks over time – those you choose, and those that choose you. Your response to these business risks, or the decisions you make over time, will be closely examined by your shareholders, regulators, employees, business partners and customers. While you can’t totally avoid them, having the right coverage in place for each risk can protect you and your business from serious consequences.
Take raising capital, for example. While you’re out there pounding the pavement to drum up much-needed funds for your next big conquest - be it introducing a new product line or hiring new staff based on your product demands - you’re putting yourself at risk. How? For one, your initial financial projections for the new business element could have been overly optimistic, or you may ultimately not be able to deliver on the promise of increased profitability. A shareholder or investor could later claim that you raised capital at a time when the company’s market or product value was low, or that their stocks got diluted when you brought other investors into the business. To safeguard this milestone, you’ll need Directors and Officers (D&O) coverage should a lawsuit be brought against you by stakeholders or investors claiming you didn’t keep your word.
What about when you have no choice but to downsize? You find yourself at a crossroads, and unfortunately, you need to cut jobs to lower costs and maintain profitability. While you may be shrinking your staff, your exposure, liability and risk will skyrocket. That’s because regulators will closely examine your operations, disgruntled employees will consider ways to retaliate and your reputation may suffer in the eyes of your consumers and clients who get wind of your impending reduction. For this business risk, you’ll need D&O coverage to protect you against shareholder, employee and regulatory exposure; Employment Practices Liability (EPL) insurance in the event that you fail to give workers appropriate notice of the layoffs, Cyber insurance should disgruntled IT staff go rogue and more.
Turn Your Business Risks into Growth
There’s no doubt that you could face these risks and more over the life of your business. But, if you’re prepared for them – with the right coverages – they can lead to growth instead. You’ll likely consider expanding your workforce at some point, or adding a new product line or vendor. Maybe you’ll face the loss of a key executive or major customer. You’re sure to experience increased regulatory oversight and maybe even acquire a new entity. For more on the coverages you’ll need to take these business risks and more, download our new ebook: Own Your Business Risk.