On average, about 45% of medium-sized businesses fail within the first five years of operation due to a lack of demand for their products and competition, as reported by the U.S Bureau of Labor Statistics (BLS). On the other hand, the Federal Emergency Management Agency (FEMA) says that about 90% of businesses collapse due to substantial financial losses resulting from disasters such as fire, theft, cyberattacks, and liability claims. In general, a mid-sized company faces different types of risks, including, among others, financial risks, liability risks, business interruption, and security risks. For these reasons, it is wise to have risk management techniques for a mid-sized company in place to protect your business from unforeseen perils.
Here are some effective risk management tips that you, as a mid-sized company, may implement to combat potential business threats.
1. Point Out the Possible Risks
To develop a suitable risk mitigation plan, you need to identify all the risks facing your business. For instance, medium-sized enterprises are increasingly vulnerable to the distributed denial of service (DDoS) type of cyberattacks, even though they believe they are too small to be attacked, as reported by IT Pro Portal News. The common perception is DDoS attacks usually target large-scale operations such as corporate websites, with the aim of extortion, business competition, hacktivism, and vandalism. Since relatively smaller businesses do not have an established brand that requires a lot of protection, they tend to focus more on drawing traffic to their sites, making them vulnerable to bad traffic that can potentially culminate into DDoS attacks. Hence, you should identify all possible risks, both internal and external, depending on the type of business you’re running, and search for ways to mitigate them.
2. Train Your Employees
In general, employee training can help avert some of the common mistakes made by employees, which include, among others:
• Accessing forbidden sites and opening phishing emails from company computers
• Using weak passwords
• Handling equipment without proper care
Such unintentional mistakes can expose your business to risks such as cyberattacks, injuries, and equipment damage, costing your company heavily. In 2019 alone, businesses and individuals in the U.S. lost an average of $3.5 billion to cyberattacks, 20% of which resulted from employee negligence, as published in the FBI’s annual Internet Crime Report. This shows just how valuable employee training can be when it comes to managing risks for a mid-sized company. In addition to training the employees, serious disciplinary measures should be taken against such employees who intentionally expose your company to risks.
3. Purchase the Right Insurance Coverage
Currently, there are over 30 million small and medium-sized businesses in the U.S. However, majority of these businesses are either uninsured or underinsured, as reported by the Insurance Journal. According to FEMA, nearly 40% of SMBs fail to reopen after a disaster, and more than 20% of businesses reopen fail within 12 months. This is where the right insurance coverage proves to be a lifesaver. Business liability policy can protect your small business against weather-related perils, ensuring it continues to operate after a weather-related disaster, such as floods. You can also add umbrella insurance to cater to all possible legal fees that may result from lawsuits.
Every business faces certain risks. To protect your business from business-related risks, adopt the risk management tips for mid-sized companies discussed above. Proper commercial insurance is also essential to protect your business from unexpected incidents. For assistance with all your coverage needs and questions, contact the experts at Knight Insurance Services. Our dedicated team is eager to assist you with all your coverage needs today.