It’s estimated that sixty per cent of startups fail within three years and twenty percent will close within just 12 months. According to Companies House there were 508,865 business deaths last year, that’s the equivalent of 58 new businesses failing every hour.
Source – UK Office for National Statistics
Often with inadequate resources, risk management controls and resilience to market forces, startups are more often exposed to financial shocks than their larger competitors.
Growth and innovation will often take up the vast majority of your time, however the importance of survival and risk management should not be understated.
The below risk management process is a simple and effective approach to manage the potential risk of startup failure:
1. Identify risks to your business
2. Analyse and measure the impact
3. Decide which risks are unacceptable
4. Reduce or transfer any unacceptable risks
5. Monitor and review
There are a number of tools available to guard against startup failure, a risk register for example can assist with recording and monitoring emerging risks within your business.
However, protecting your balance sheet and having sufficient resource to access legal support should something untoward occur, can make all the difference between a successful and failed startup.
Below are examples of risks that startups face that can be effectively transferred with business insurance:
• A 3rd party claim for an employee that slips and falls down the stairs.
• A 3rd party claim for damages arising from a breach of contract.
• A 3rd party claim for accidental personal injury to a member of the public.
• Damage to costly equipment that your business relies on to operate.
• A 3rd party claim for injury or property damage from a product you supplied.
• An investigation and fine by a regulator that alleges your non-compliance.
• Property damage to your premises as a result of a fire, flood, storm, ect.
• The cost of not being able to trade as a result of a fire, flood, storm, ect.
• Theft of personal data and being held to ransom to make a financial payment.
• A social engineering scam means you make a payment to the wrong person.
For a reasonable cost there are protections available that can provide financial and legal support when your business requires it most.
Originally posted by Get Indemnity
This guide is for information purposes and based on sources we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.