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Small businesses in SA must prepare for current risk landscape

Small businesses in SA must prepare for current risk landscape
07-09-22 / Duty Editor

Small businesses in SA must prepare for current risk landscape

Johannesburg - Small business and new business owners in South Africa must understand that they are working in an environment that comes with unique risks such as critical infrastructure blackouts, political unrest and violence and logistics challenges. As such, they need to ensure that their businesses and assets are protected from disruptions that could occur at any given time and remain outside of their control.

This is according to Dini Nondumo, Head of Commercial Insurance at Standard Bank Insurance, who adds that many small business owners put all their assets and lives into their businesses. “The reality, however, is that these business owners are operating in an environment that comes with unexpected disruptions that, if not provisioned for, could have an adverse effect on a business’s ability to trade and threaten the sustainability of their operations.”

Fortunately, businesses can access a wide range of insurance types to protect their most important assets from various risks, some of which are unique to South Africa and others that businesses worldwide are facing such as extreme weather events because of climate change and increased cyber-attacks. “Insurance is necessary for all businesses. When you own a small retail business and it has absorbed all you have, insurance protection is vital,” Nondumo says.

These are some of the short-term insurance types that a South African business should consider, which can be customised to the nature of their business, as soon as possible, says Nondumo.

 Small business insurance

“The most important thing on the list is making sure that you are adequately insured. Your insurance should cover all your stock, fittings and take care of costs that may be incurred through customers suffering injury on your premises,” says Nondumo.

In the case of stock, insurance should cover additional costs that could be incurred if you are forced, for instance, to fly in stock to replenish shelves rather than wait for a normal delivery.

Sectional title insurance

Businesses with sectional title properties are faced with a range of complex risks, with significant financial implications that can mean the difference between business success and failure. If an office or warehouse has inadequate building cover and the building suffers fire or flood damage, this could lead to business interruption. In such an instance, it’s important to be insured appropriately.

 Cybercrime insurance

The rapid adoption of technology has disrupted traditional business models, with many firms forced to digitise faster than originally planned. However, with increased use of technology comes an increased risk of cyber-attacks - the cost of which could cripple a business without the right protection in place. It is worth remembering that no security is perfect. You can reduce your risk, but you can never eliminate it completely. Typical business insurance policies do not cover damages resulting from a successful cyberattack, so consider purchasing Commercial Cyber Insurance as a safety net.

 Fleet insurance

As a result of the accelerated shift to online purchasing that the pandemic initiated, businesses have had to gear up to provide home delivery, or beef up existing fleets. Managing a fleet of vehicles comes with great responsibility. In addition to managing drivers and maintenance, fleet managers must keep the safety and protection of their assets front of mind. To mitigate any risks surrounding your fleet, it’s important to make sure that your fleet has adequate insurance cover in place.

 Business interruption cover

“If your shop is in a shopping centre that ends up being badly damaged by fire or looting for instance, you may be required to close your shop while construction and repairs take place. Unless you are properly insured, this could lead to the closure of your business. With business interruption coverage, you can continue to pay wages and loss of profits can also be covered for pre-determined periods.

“In the event of having to move to a new shop, or to new premises altogether, because of an accident at a centre, these costs can also be effectively covered,” says Nondumo.

Public liability insurance

Public liability insurance must also be carefully considered. Typically, most people suffer injuries due to ‘slip and fall’ accidents. However, if you own a restaurant or supply food to the public, it is also worthwhile to ask a broker what coverage you should have should people become sick due to contamination of foodstuffs or other causes.

Do I need an insurance broker?

The question most asked by small business owners is whether an insurance broker should be involved in arranging business insurance.

“This depends entirely on what suits you,” says Nondumo. “Many people running traditional businesses are happy to arrange insurance by phone. If your business is different to others, and if you are concerned about being under or over-insured, the best thing to do is to contact a broker.” 

A broker will arrange for an assessor to visit your premises, inspect fittings, and discuss all insurance needs. Insurance can then be arranged by the broker who will also act as an intermediary with the insurance company should a claim become necessary.

“Whatever choice you make, the most important thing is that you reevaluate your position and update policy values once a year. This will help ensure that you are never placed in the unenviable position of losing your business or finding yourself suffering from financial hardships because of an unexpected event at your place of business.”

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