The Top Risks Businesses Face

2014-02-14
By: Advocate Brokerage

Every company, large and small, has unique risks. Some have workers who operate heavy machinery or drive vehicles while on the job, while others serve food and alcohol or handle toxic substances. Doctors and hospital staff handle patients, body fluids, sharp needles and equipment. Some employees handle sensitive documents, data, or money, potentially opening the door to business fraud. For this reason, every company needs commercial insurance coverage specifically matched to the risks of the enterprise, including: Property damage from fire, storms and accidents

• Liability in many forms, including product liability, accident/injury liability, libel, malpractice and professional liability or “errors and omissions” risks
• Fraud, embezzlement, extortion
• Cyber-crime and data loss

Determining your risks and making sure you have the right commercial insurance in place requires an evaluation of a wide range of factors, including:

• Your business needs
• How you serve your customers
• How many employees you have on staff
• The materials or substances those employees handle
• Whether your employees drive in the course of their work
• The safety of your building, equipment, and processes
• The security of your data and intellectual property
• Risks facing your corporate officers

To assess your business insurance needs, start by contacting Advocate Brokerage, a Trusted Choice agent that specializes in commercial insurance. Advocate Brokerage can fully address every aspect of your business coverage and help to ensure that you do not have gaps that could leave your business exposed to financial risk.

Business Fraud Stats from the NFIB and the FBI

• In 2011 the FBI secured $2.4 billion in restitution for corporate fraud
• The same year, the FBI ordered $16.1 million in fines from corporate criminals
• The median loss in a fraudulent scheme for businesses of 100 employees or less is $190,000

Corporate fraud, or “white collar crime,” is one type of business risk that nearly every commercial enterprise can encounter, whether it is a large corporation, a farm, a school, a restaurant, a non-profit charity, a medical practice or a machine shop. This is because any business operation, large or small, involves the exchange of money for goods and services.

According to the Association of Certified Fraud Examiners (ACFE), small business owners tend to believe their company is not prone to business fraud. However, in a study the ACFE found that small businesses are actually at a greater risk of employee embezzlement simply because they have a higher level of trust in their staff. The result of that trust can unfortunately result in more opportunity and more temptation for those who have access to the financials.

There are a few key lessons we can learn from the ACFE business fraud study:

1. The first step in mitigating risk is to gain a full understanding of what can happen in the course of doing business.
2. The worst time to find out that you need coverage for a problem is after the incident has occurred.

Your Advocate Brokerage agent can work with you to help you evaluate your business risks and reduce your exposure.