- Financial Services

How to apply best protective measures for inherent risk of your business

For every kind of business, irrespective of its size and nature of operations, remember that your business is always remain exposed to some critical inherent risks. For example some important risks include filing of suits and litigations due to work related injuries, filing of suits by creditors or suppliers, liquidity risk, risks related to breaching bank covenants etc. Note that all these risk factors are very critical and so, can also challenge your survival in a market. Business analysts and managers till now remain successful in finding of three remedies which every business has in order to cope with. These are a) avoidance strategy b) diversification strategy and c) insurance covers. The first two strategies might let one to circumvent unfavourable events against the subject risks but also leads one to forgo some important business opportunities. It means that most suitable, advisable and appropriate way is get insurance cover. Yes, in these days, almost every business is procuring business insurance in Melbourne so that it can focus on its core areas without feeling any fatal risk. The major areas which are covered under business insurance policy include injury coverage in a workplace, property damage cover, cover against advertising cost, financial losses, breaching of bank covenants for obtaining financing, protection against business image and brand identity and each and every important area which might challenge survival of your business.  

Risk sharing for financial losses 

Any business can face operating losses due to several reasons. Sometimes company might have to bear such losses due to its poor quality and sometimes due to any unplanned event. In either case, don’t you think if any insurance company shares your financial loss would be a notable and worthy remedy. That is why some business managers also regard business insurance companies as saviours of exigencies.  

Cost sharing for litigations and legal proceedings 

Undisputedly, every business has to face litigation and legal proceedings in different stages of its lifecycle. For example sometimes suppliers or creditors sue you. Sometimes you have to file a suit against a license issuing authority. In some cases, you might have to challenge revenue officers in taxation matters. For all these purposes, remember that legal expenses are always material. But if you acquire a business insurance policy, it always cover legal expenses incurred by your company on account of investigation and attorney expenses.  

Cover work related injury expenses 

Recent survey conducted in Australia has revealed that in most of the cases insurance companies has to deal with work injury related claims. This is because work injuries are very common in every kind of business. Especially when you are undertaking a manufacturing business or construction activities, need of business insurance policy would become more pertinent and relevant.  

Cover infringement of patent rights 

It is also one of the most considerable concern. In all industries, number of cases has been reported wherein a competitor company files suit against other company due to infringement or copy of patent rights and trademarks. Irrespective of the outcome of such case, one would be glad to know that business insurance policy always cover legal and settlement expenses.  

Property damage coverage 

For manufacturing and construction companies, it might be possible you damage other’s premises while undergoing your routine business/development activities. As you can never predict such events, the best and most considerable way is to have insurance cover against such unplanned events.  

Conclusion 

It cannot be said that obtaining a business insurance policy can solve your each and every business related dilemma. In other words, it is not an arrangement in which business/company do not have to spend a single penny in occurrence of any unwanted event. But it is a best remedy or arrangement due to which you can share your material business risk. Like, sharing of losses and other aspects always let your business to enjoy some relief. Most importantly, when one compares that its business has to endure fixed amount of premium every year and in lieu of it such arrangement can cover its all material inherent business risks, no one can deny that acquiring a business insurance policy would be a best decision for its business.  

About Ellie Harvey

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