Risk Management Bulletin

Businesses of all types and sizes face risks. Some risks are worth taking and increase your revenue, but other risks cause you to lose money. It’s important for you to spend time evaluating your business risks as you determine which ones are worthwhile to take.

Common Business Risks

You small business may face numerous risks, but they typically fall into seven categories.

Operational Risks

Operational risks are related to your company’s business functions. They can include a broad range of challenges, including fraud, IT risks and legal issues, and are usually caused by an inadequate or failed system, internal process or human.

Compliance Risks

Hundreds of federal, state and local laws and regulations affect your small business. Maintaining compliance may cost thousands of dollars annually, but you will face fines for non-compliance.

Fraud and Theft Risks

Any type of embezzlement, dishonest financial reporting, unethical or illegal acts, or theft by employees or customers harms your business.

Credit Risks

Taking out a loan to start or maintain your company or extending credit to a customer are two examples of small business credit risks.

IT Risks

Data breaches, loss of data and cyber attacks affect your ability to do business. These risks also open the door to lawsuits.

Medical Risks

Accidents, injuries, illnesses and environmental factors can affect the health and well-being of your employees and customers.

Reputational Risks

Slow customer service or a bad online review can damage your reputation, in some cases beyond repair.

How to Evaluate Your Risks

After identifying business risks, take three steps to evaluate if the risk is worth taking or one you should avoid.

Determine the rank of each risk.

Risks can affect each business differently. Assign each risk a rank of low, medium or high so that you can address the most serious risks first and protect your business.

Assign a financial loss figure to each risk.

Know how much a risk will cost and then decide if it’s financially worth it. As an example, decide how much money an expansion will bring in versus how much it will cost for the expansion loan, including fees and interest.

Create a plan to handle risks effectively.

When you know which risks your business faces, you can decide how to handle each one effectively. You can hire an IT specialist to monitor cyber risks, assign someone to the role of safety manager as you maintain OSHA compliance or require upfront payments that reduce your credit risk.

Evaluating your business risks is an important part of your company’s success. Discuss your risk management with your business mentor, attorney, financial planner and insurance agent.

Corrosives are solid or liquid substances that exact extreme caution when handling. They are usually either an acid, such as nitric acid, sulfuric acid, chromic acid, hydrochloric acid, hydrofluoric acid, or acetic acid, or a base, such as ammonium hydroxide, sodium hydroxide, or potassium hydroxide. Anyone that has ever seen the effects that corrosives have on metal or other strong materials can easily imagine the damage that a corrosive would do to the delicate human skin. Adding to the danger is the fact that corrosives act upon contact, meaning that damage begins the moment that the corrosive or its vapors come into contact with the eyes, mouth, skin, digestive tract, or respiratory tract.

Injuries from coming into contact with corrosive materials might be extensive and, in some cases, irreversible. Keep in mind that the stronger the concentrate of the corrosive material is, the more damage it has the potential of doing. Some of the most common injuries that result from unprotected contact with corrosives are burns to the eyes and skin. The end result might be blindness or severe scarring of the skin tissues. When the vapors from corrosive materials are inhaled, they might cause burning to the respiratory tract, pulmonary edema (the buildup of fluid around the lungs), or even death. Although less common, if ingested, the corrosive might cause extensive burning or perforation in the mouth, esophagus, and stomach.

Aside from the danger of corrosives coming into direct contact with the body, some are combustible or flammable. These substances can very easily explode or catch on fire if not properly stored and handled. One more danger comes from some corrosives being incompatible with other chemicals. When incompatible chemicals are mixed or accidentally come into contact with one another, the result can be a dangerous, sometimes deadly, chemical reaction. Again, the dangers of corrosive materials demand that they be treated with care, respect, and caution.

Any worker that handles any corrosive material should always protect themselves:

• Make sure that corrosives are stored in a safe area. This not only means away from other incompatible substances, but, sometimes even away from other corrosives.
• The storage area should be secured, cool, and dry.
• If it’s necessary to transfer corrosive materials between containers, then make sure that the transfer is done with extreme caution and that the appropriate safety steps have been taken.
• There should be appropriate ventilation anytime a corrosive material is accessed.
• If it’s necessary to mix corrosive materials with water, then be attentive to avoid overfilling and spillage. It’s always best to add water in minute amounts.
• Never reuse any container that previously contained a corrosive material.
• Remember to follow the proper protocol when disposing of unused corrosive materials; these shouldn’t just be poured down a drain.
• Remember to don appropriate personal protective equipment as per protocol. This might include chemical rubber gloves, apron, goggles, face mask, and/or respiratory equipment.
• In the event an accident does occur, immediately seek first aid for the injured. The area should be closed off to prevent subsequent injuries and the appropriate chain of command should be notified.

Remember, it’s too late to be cautious once an accident occurs. It only takes one mistake to produce a costly, painful, disfiguring, and potentially deadly injury.

Performers such as magicians, singers, dancers and mascots entertain and help people have fun. While satisfying, this career includes a variety of risks. As a performer, you must know the risks you face and the appropriate safety measures as well as insurance options that protect you, your audience and your business.

Performer Risks and Safety Measures

Performers face a variety of risks every time they perform.

Body Strain – Back, leg or vocal strain are common injuries reported by performers. The frequency of performances can cause new injuries or aggravate old ones.

When performing, stand on cushioned surfaces, avoid quick turns and adjust your routine to reduce injury. Rest between shows, too.

Electric Shock or Electrocution – Exposed wires, faulty plugs or wet electronic devices can cause electric shock or electrocution during rehearsals or performances.

Inspect all microphones, amplifiers and other equipment carefully and often. Store liquid away from your electric equipment at all times, too.

Falling Objects – Props, scaffolding, backdrops, tables and other objects used for performing can fall and injure a performer or the audience.

Secure everything properly on stage. Test all props before your performance to ensure they’re in proper working order.

Falling Off Equipment – Whether you ride a unicycle, walk up and down stairs or dance, you face the danger of falling off your equipment.

Be aware of your surroundings at all times. When performing on a new stage, practice first and make adjustments to your routine, particularly if the stage is smaller than your normal performance area.

Overheating  – Performing under hot lights or in a costume can cause overheating. You may feel faint, get sick or suffer heat stroke.

Stay hydrated before, during and after the show. When possible, wear your costume only as long as necessary. If the venue is improperly ventilated or not air conditioned, place fans around the stage so you stay cool.

Tripping or Falling – Microphone wires, loose cords, performance props, costumes and other objects pose tripping or falling risks.

Keep your performance area and all walkways neat and tidy when you pick up wands, juggling balls and other objects immediately. Secure cables and cords to the floor, and store boxes or bags neatly off stage, too.

Protect Yourself with Performer Insurance

Although you take safety precautions to prevent common performer risks, accidents happen. Purchase performer insurance. It’s a commercial general liability policy that pays for injuries, damages and legal liabilities you may face as you perform. With it, you protect yourself, your audience and your business. You can then focus on entertaining audiences and having fun.

The bad news: Exposure to indoor mold can trigger serious allergic reactions and even infections among workers and visitors to your building, leading to lost productivity – not to mention the costs and hassles of litigation.

The good news: Taking precautions against this risk can help prevent health problems, limiting your exposure.

The potential for indoor exposure to mold has increased in recent years because of the way we live. To conserve energy, buildings are being built more tightly — and the tighter the structure, the greater the exposure to indoor mold. Using synthetic building materials literally seals buildings and reduces air movement, creating a higher moisture content that nurtures mold growth.

Poorly designed or maintained heating, ventilation, and air-conditioning systems contribute to indoor mold exposure; Air filters and air filtration devices provide a comfortable habitat for mold, especially in high humidity conditions. HVAC systems can re-circulate air that contains mold spores and toxins if there are no effective filter systems to trap them. Failure to maintain and clean systems leads to unchecked mold growth and circulation indoors. Humidity worsens the problem; mold thrives in humid conditions.

Human factors contribute to mold exposure, including the fact that we spend so much time indoors, and many of us have compromised immune systems from diseases and medications. What’s more, new and harmful mold organisms are circulating constantly.

Although there’s no practical way to eliminate all indoor molds and mold spores, to stop indoor mold growth and reduce the presence of mold in the workplace, we’d recommend taking these steps:

Clean small-scale molds ASAP, using a 10% solution of chlorine bleach; always wear the proper Personal Protection Equipment (which includes gloves, eye protection, and a mask to protect against airborne spores) and dry surfaces completely after cleaning.

Fix leaks quickly; moisture from leaks provides an ideal environment for mold growth.

Seal surfaces with a substance such as paint to which fungicide has been added.

Large-scale mold problems require the use of professional cleaning services that employ such treatments as oxidizers, fungicides, bactericides, and shielding compounds, which seal the antimicrobial agents within the treated surface.

Our risk management specialists would be happy to help you deal with mold problems in your workplace. Just give us a call.

Starting your own business can be risky. Numerous factors can affect your success and your business’s value. Financial risk and business risk are two common types of risks you face as a business owner. Know the differences between financial and business risk as you plan for success.

What is Financial Risk?

Your business’s financial risk refers to your ability to repay creditors and still meet your other financial obligations. In general, financial risk relates more to your business’s debts than overall financial health.

There are several types of financial risk.

• Credit risk if your loans go into default
• Liquidity risk if you cannot sell or purchase assets or securities quickly
• Asset backed risk if securities fall in value
• Foreign investment risk if foreign economies face downturns
• Equity risk if stocks change in value
• Currency risk if interest rates or monetary values fluctuate

Reduce financial risk when you:

• Limit debts.
• Repay debts on time.
• Expand and diversify your customer base and investment portfolio.
• Continue to look for ways to decrease overall spending and increase savings.

What is Business Risk?

Business risk describes cash flow. It relates to your business’s ability to pay regular operating expenses, not debt. There are two kinds of business risk.

Systematic Risk

Systematic or systemic risk describes the economy in general. An economic downturn or failure because of a recession, economic crash, interest rate drop, natural disaster, war or other factor could cause your business to suffer.

Every business faces systematic risks, and you can’t eliminate them. However, you can increase or decrease your systematic risk.

Unsystematic Risk

Unsystematic or unsystemic risk describes your specific business’s chances of experiencing a downturn or failure. This type of risk varies greatly between businesses, and you can make decisions and take actions that increase or decrease your unsystematic risk.

Decrease your overall business risks when you:

• Make smart business choices that cushion your business against economic downturns.
• Manage your finances properly.
• Cut expenses when necessary.
• Diversify your portfolio.
• Own several businesses in various industries.

Why Should you Manage Financial and Business Risks?

The worth of your business depends in part on your risk factors. The more risks your business faces, the less it is worth. Improve your chances of succeeding and turning a profit when you decrease your reduce debt, improve your financial standing and take other wise steps.

For more information on the financial risks and business risks your business faces, talk to your financial advisor. He or she will help you plan for and successfully navigate the risks your business faces.

Bulldozers, scrapers, and tractors, oh my! A jobsite crawling with heavy equipment can sometimes feel like a danger zone. However, with the proper heavy equipment safety guidelines in place, you can reduce risk on your jobsite and ensure your workers head home unscathed each and every day.

There are three main ingredients to safe heavy equipment operation: Safe equipment, proper training and a safe attitude, and constant awareness of all jobsite activities. If heavy equipment operators are armed with these three tools, they’ll have no problem playing it safe. Read on to learn more about these and other essential safety factors for operating heavy equipment on the jobsite.

Play it safe with dependable equipment 

The Occupational Safety & Health Administration (OSHA) puts a lot of emphasis on the safety features of heavy equipment. However, there’s much more to keeping equipment safe than just inspecting the machine’s safety features. After all, countless things can go wrong with this complex equipment, and these problems can lead to some major risks on the jobsite.

Therefore, it’s extremely important to create customized inspection checklists for each unique piece of equipment. Safety experts recommend that heavy equipment operators conduct a pre-operational walk around and pre-start up (in cab) inspection each and every day before they crank up.

During this inspection, the worker should ensure that service, emergency, and parking brakes are all functioning; headlights, taillights, and backup lights are operating properly; and that the horn is working. Of course, these are just a few of the items that should be included on the checklist. Employers should create customized checklists for each piece of equipment based on both OSHA guidelines and the information provided in the equipment operating manual.

Steer clear of jobsite dangers

Heavy equipment operators should be well aware of all jobsite activities so they can avoid any potential dangers. That’s why it’s critical for equipment operators to walk through site activity checklists daily. Here are a few obstacles and activities operators should stay on the lookout for:

Overhead lines: Many fatal occupational injuries occur each year in the U.S. due to contact between large jobsite equipment and overhead lines. That’s why equipment operators must exercise extreme caution when working anywhere near overhead power lines. Workers should assume that all overhead lines are energized, unless electrical utility authorities have indicated otherwise, and that they’re grounded visibly and marked appropriately. OSHA provides specific requirements for the safe use of equipment near overhead lines.

Barricades: Barricades must be used on any jobsite where heavy equipment is in operation. These barricades help to notify workers where equipment is in use so that they can stay out of the area and avoid serious injury.

Hand Signals: If a crane is operating on a jobsite, the crane operator and the signaler must know the hand signals that are required by OSHA. These hand signals can be used for other types of equipment, as well.

Ensure safety with well-trained workers 

Of course, a jobsite is only as safe as its workers. That’s why it’s so important to employ only well-trained, safety-conscious workers for a heavy equipment jobsite. According to OSHA requirements, jobsites, materials, and equipment should undergo frequent and regular inspections only by “competent persons” designated by the employer. It takes training to be a competent worker.

It’s extremely important to train your employees on proper equipment inspection and operation safety. After all, your workers’ lives could depend on it. For more information, visit the OSHA website at www.osha.gov.

Every small business faces financial risks. However, you can lower your risks and improve your chances of success when you become aware of several external and internal financial risk factors.

External Risks

Economic Risks

Economic downturns or failures as well as economic changes within certain industries, geographies or demographic groups play a role in your business’s success. Any of these changes can decrease income and increase expenses.

While you cannot eliminate or even control economic risks, you can prepare for them.

• Strategize ways to combat economic downturns.
• Boost savings during good economic seasons.
• Diversify investments, products and your customer base.
• Pay debts quickly.
• Look for new financing options regularly.
• Continue to innovate.

Legal Risks

Safety regulation updates and tax law changes can happen at any time. You may find yourself facing a mandatory safety system upgrade, an unexpected property tax increase or a government ban on a product you produce.

Prepare for legal risks when you save a cash reserve. It can pay for unforeseen regulation or tax changes. Be sure you stay up-to-date on industry trends, too, so you are better prepared to shift your business model, focus or products based on legal changes.

Internal Risks

Receivables

Part of your business strategy may include extending credit to your customers. You give them the product and they have a set time to pay the invoice. Sometimes, though, those customers cannot or will not pay their bills on time. As a result, you will not be able to pay your expenses.

Consider requesting payment up-front or build a cash reserve that covers unpaid invoices and all your regular expenses. These steps allow you to continue paying your bills, and they protect your business.

Performance Risks

You have a great deal of control over performance risks even though they vary based on your specific business and its structure and products. Some typical performance risk factors that affect your bottom line include underperforming quarters, bad investments, new competition, planning errors, personnel challenges or quality issues.

These performance risks are often avoidable. Consider implementing several helpful suggestions.

• Save enough cash to cover a slow quarter.
• Decrease expenses and debt where possible.
• Maintain consistent high quality standards.
• Improve your hiring process then take measures to retain quality employees.
• Focus on doing the best job possible so you can confidently face competition.
• Evaluate performance regularly with a mentor and financial advisor.

As a small business owner, you will face financial challenges. However, you can prepare to face both the external and internal factors of financial risk. Make an appointment to meet with your financial advisor and discuss ways to combat these risks and help your small business succeed.

Bars, taverns, restaurants and nightclubs face unusual risks. If you own or work at one of these establishments, understand your risks and the risk management insurance you need.

Potential Risks for Bars, Taverns, Restaurants and Nightclubs

While every business is slightly different, there are common risks bars, taverns, restaurants and nightclubs face. They include:

• Liability if guests or employees fall, slip or are injured
• Liquor Liability if a guest drinks too much and causes an accident or other liability
• Food Contamination
• Fire Hazards
• Increased Pollution Liability Regulations
• Theft
• Assault and Battery

Why Purchase Risk Management Insurance?

Because the risks are high for your bar, tavern, restaurant or nightclub, you need insurance. It covers any injuries, illnesses or liabilities that occur on your property. It also protects your personal assets if you are sued.

How to Purchase Risk Management for Bars, Taverns, Restaurants and Nightclubs

Contact your insurance agent for information on purchasing insurance for your establishment. Qualified businesses include:

• Neighborhood bars, pubs and taverns
• Restaurants with high-percentage alcohol sales
• Craft brewpubs
• Sports bars
• Nightclubs and discotheques
• Wine bars
• Cocktail lounges
• Comedy clubs
• Fraternal Organizations

To ensure you get adequate coverage for your needs, discuss details about your specific establishment with your insurance agent. Factors like how long your employees have worked in the industry and the types of guests you serve can affect the type of insurance you purchase and your insurance premiums.

Ways to Decrease Your Risks

To reduce your risks, protect your staff and patrons, and potentially lower your insurance premiums, follow a few steps.

1. 1. Enroll managers, servers, door hosts, bouncers and all employees in regular training courses that help them learn techniques that reduce risks. Potential trainings address legal responsibilities when serving alcohol, how to recognize and prevent intoxication and food safety.

1. 1. Hire experienced staff. Experienced staff are less likely to engage in risky behavior and some insurance companies give lower rates to establishments with staff who have over three years of experience.

1. 1. Card everyone. This step ensures you don’t serve any minors.

1. 1. Limit free drink giveaways so you don’t encourage intoxication.

1. 1. Establish protocols for handling inebriated guests. Your employees should know to call a cab or take other protocols if someone has had drank too much.

1. 1. Be vigilant about reducing risks. Keep the floor clean, follow safe food guidelines, make repairs right away, ensure there’s adequate outdoor lighting and take other steps to reduce risks around your establishment.

When you understand risk management for bars, taverns, restaurants and nightclubs, you can take the necessary steps to protect your employees and patrons. Talk to your insurance agent for more ideas on managing and reducing your risks.

The September 11 terrorist attacks caused immense loss of life, human suffering, and property destruction, particularly at the World Trade Center in New York City. The insurance losses from injuries and property damage were very large. However, the losses resulting from businesses in the area having to shut down for extended periods of time were huge. Businesses filed nearly 5,500 business interruption claims for more than $12 billion following 9/11. For many organizations, the loss of income coupled with continuing expenses after a fire or other disaster can be even more devastating than the damage itself.

To increase the chances that a loss will not shut operations down permanently, organizations must assess their exposures accurately by asking some questions.

What is the most the organization could lose from a shutdown? 

Commercial Property insurance policies define “loss of income” as the sum of the expected pre-tax profit or loss and necessary continuing expenses. For example, if the expected profit is $300,000 and necessary continuing expenses are $100,000, the potential loss of income is $400,000. To calculate their exposure to business interruption losses, organizations should refer to their balance sheets, profit and loss statements, and cash flow statements. Insurance companies also have worksheets available to assist with the calculation.

How much insurance should be carried? 

Once the organization knows the dollar amount of its exposure, it must decide how much Business Interruption insurance to buy. The key considerations are the length of time the insurance is likely to apply and the coinsurance percentage the organization must meet. Coverage usually begins 72 hours following the damage to the property and ends when business resumes at another location or when the building should be repaired with reasonable speed, whichever occurs first. If the organization decided that the coverage period would be around six months, it could buy an amount of insurance that would satisfy a 50% coinsurance requirement. If the interruption would last longer, higher coinsurance percentage and limits would be necessary.

How long will it take business to return to normal? 

Even after operations resume, it could be some time before revenue returns to normal levels. Customers who had gone elsewhere during the shutdown might be slow to return. The standard insurance policy extends coverage for 30 days after operations resume, but some businesses might need more time than that, especially if their businesses are seasonal. For example, a seaside restaurant in New Jersey that makes most of its profits during the summer will need additional coverage even if it can re-open in November.

How much of the normal payroll expense will continue during the shutdown? 

The organization will need the continuing services of some employees while it attempts to re-open, but other employees might not be necessary. For example, accounting staff will be needed to pay mandatory expenses such as property taxes and collect receivables earned before the shutdown. Employees who stock shelves will not be needed if there are no shelves to stock.

Does the business depend on other businesses for revenue? 

A business can suffer a loss even if its own building is untouched. A loss that shuts down a key customer or supplier or damage to nearby property that causes authorities to close off access to the street can devastate a business’s bottom line (this happened to many businesses affected by 9/11). Special insurance coverage is available to protect against this possibility. Our professional insurance agents can help you answer these questions and identify insurance companies that can meet coverage needs. With some effort and planning before a loss happens, an organization can emerge from a shut down and return to profitability.

Almost any job can be risky, but some jobs are more dangerous than others.  Occupational Hazard Insurance offers invaluable coverage for anyone who works in a dangerous job. Learn more about Occupational Hazard Insurance, especially if you work in a dangerous occupation.

What is Occupational Hazard Insurance?

Your risk of injury or death increases when you work in a dangerous job. Occupational Hazard Insurance provides financial resources to you or your loved ones if you suffer an injury or die while performing your job. It’s protective coverage that gives you peace of mind.

Who is Eligible for Occupational Hazard Insurance?

Employees who work in dangerous occupations are eligible for Occupational Hazard Insurance. However, each insurance carrier has different eligibility requirements.

Typically, you must be between 18 and 70 years of age to qualify for the coverage. Additionally, you may be required to undergo occupational training. Other special requirements can include licensing or a specific business model. For example, truck drivers must have a valid license and be self-employed or work as independent contractors to obtain this insurance.

How Much Occupational Hazard Insurance do you Need?

Every state implements different regulations for Occupational Hazard Insurance. Check your state’s requirements to ensure you purchase enough coverage.

You’ll also want to purchase enough coverage for your needs. Be sure your policy covers your regular bills or is enough to give your survivors adequate financial resources to meet their needs and maintain financial security.

What are the Benefits of Occupational Hazard Insurance?

Most Occupational Hazard Insurance coverage includes several benefits. Check your policy for details. In general, a policy will cover:

• Accident-related medical and dental expenses
• Accidental death or dismemberment
• Temporary or permanent disability
• Reduction in disability income
• Severe burn benefit
• Paralysis
• Survivors benefits

How Much Does Occupational Hazard Insurance Cost?

Expect to pay more for an Occupational Hazard Insurance policy since you are working in a dangerous job and the insurance company takes a big risk in insuring you. Additionally, other factors affect your premium. They include your:

• Age
• Industry
• Safety history
• Amount of coverage
• Type of coverage

Your insurance carrier may also consider other factors when determining the cost of your premium. Discuss the details with your agent.

You may also wish to shop around. Compare policies and costs as you find the right Occupational Hazard Insurance for your budget and needs.

Occupational Hazard Insurance gives you financial resources if you’re injured or die on the job. It’s valuable coverage, so discern your needs and options before you work another day.