Assessing Your Business Income Risk

Understanding the risk to your Business Income is the first step in deciding whether or not to purchase Business Income insurance.  But before we get to the insurance part, let’s find out what your potential exposure to Business Income risk actually is.

The first step in any good Risk Management program is Assessment and Identification.  The assessment process helps identify whether or not there is exposure to a certain kind of loss – and where those exposures might be.  Assessing whether or not you have any Business Income Exposure is a great first step for any size business.  Cash is oxygen for your business – if an expected loss occurs within your business and you lose access to cash flow – how will you be able to recover?

General Questions to Ask Yourself

How essential is it for the financial health of your business to resume operations immediately following any type of catastrophe?

Think about it this way – if your business operations were to shut down for an hour, 24 hours, or even weeks or months – how would it affect your financial statements?  Don’t think about the potential events that could cause this yet (that’s a whole other subject), but think about how a shutdown would affect your business financially?

Do you have a written contingency plan in place to implement a resumption of operations?  How long will it take you to get back up and running?

These plans fall under the category of Business Continuity Planning.  You might recall this being a significant trend around the time the coronavirus pandemic first started – and for good reason.  Having been out from under COVID for a while now, it’s something that has garnered less attention, but is still very relevant as pandemics are only one potential trigger for these plans.

Can you resume operations in a temporary location?

For Sales and Office based professions, it’s very possible you can transition to temporary remote work; however, for manufacturers and service based operations, it might be impossible.

Would you be able to continue business (even partially) while your building is being repaired or equipment being installed?

Determining to what extent your operations will be interrupted is vital to appropriate planning.  If there’s a way that you can continue operating, even in a partial capacity, that helps identify where resources need to be placed and how much actual insurance coverage you might need.  This is an important part of maintaining efficient insurance coverage.  Communicating this much helps with finding available credits to reduce the costs of your business income coverage.

Assessing Business Income Risk

Is your building compliant with all current building codes?

The thing about compliance is that it’s always evolving.  As new building codes are passed into law, you may become subject to delays in repairs or reconstruction due to a need to update building code compliance.  This also affects more than just your business income coverage and brings to light potential exposure to building law and ordinance risk.  Again, knowing how this works allows for insurance coverage efficiency by purchasing only the coverage you need.

Business Income Exposure – Next Steps

These questions are based on identifying exposure.  When analyzing your exposure here, you can decide if the risk to your cash flow is significant enough to start investing in risk management, whether or not to purchase insurance, or potentially a mix of both.

Depending on your responses, there are another 20+ questions that we can go through to dive deeper into where your true exposures lie.  The foundation for a risk management program begins here, but like with any project, the foundation is only the beginning.

An Approach Built to Save You Time and Improve Your Bottom Line

The process we take our clients through is designed to make the best use of your time.  We don’t need to re-invent the wheel – we organize it and make it more efficient. Our defined process is scientific in nature because our primary concern is on improving your bottom line.  But business decisions do not get made in a vacuum which is why we build in the flexibility needed to be incorporated into your overarching business goals.

Setting Up an Initial Consultation

It’s our belief that providing value to our current and potential clients up front leads to long term mutually beneficial relationships.  We’re happy to partner with employers when there is the right fit to work together – even if you’re not our current client – at no cost to you.

When you’re ready to start evaluating how much exposure you have to business income loss, get in contact with us for an initial consultation  or call us at 610.671.3500.

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Are you ready to save time, aggravation, and money? The team at Stillwell Risk Partners is here and ready to make the process as painless as possible. We look forward to meeting you!

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