Risk management ranks relatively low on the priorities list for small business owners, according to a recent survey by Travelers. And that outlook could mean trouble down the road when problems arise for those firms, the insurer warns.
“Small business ownership, while potentially very rewarding, also carries with it great risks,” said Marc Schmittlein, president and chief executive officer, Travelers Select Accounts. “Owners largely focus their efforts on growing their business and, too often, they overlook risks that could stunt that growth and/or even shut their doors for business permanently. The most successful owners are those that balance their pursuit of growth with a prudent approach to risk management.”
Travelers polled attendees last month during America’s Small Business Summit 2010 in Washington, D.C., and found that risk management ranked among the three lowest priorities — along with compliance with government regulations and protecting against lawsuits and litigation — out of seven listed by the insurer. Marketing and sales topped the priorities list.
The insurer found that nearly half of small businesses are operating without a business continuity plan, a document that outlines how a business will operate and respond to a disaster. Travelers found that only 36 percent of those polled have ever spoken with an insurance agent about developing one.
The survey found that business owners are confident that their businesses are protected against insurable risks that can result in significant financial losses or even cause them to go out of business altogether. Only 6 percent of business owners are not at all confident that their business is adequately protected, while 53 percent are somewhat confident and 41 percent consider themselves extremely confident.
“While confidence is key to a small business owner’s success, so much of what can derail a business is outside of the business owner’s control,” said Schmittlein. “There is no reason for a business owner to bear risks that can be avoided. Developing a Business Continuity Plan is a critical success factor for business owners with a long-term view.”
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