Recent research conducted by Allianz has revealed that amongst SME’s, business interruption is one of their top worries when it comes to risks to their business.
As well as business interruption, the research revealed that the top 5 concerns of SME’s include:
Why is Business Interruption such a concern to SME’s?
As a small or medium sized business, you may have fewer financial resources to call upon if your business were to face significant interruption to day to day operations.
If you were forced to close your doors it could have significant consequences. For smaller businesses it can sometimes be impossible to recover, depending on the effects of the interruption to income and revenue.
Whilst fire and explosion are thought to be the most common causes of business interruption, business interruption can be caused by a wide range of events. The nature of risk events evolves and changes all the time. Take business interruption caused by terrorist eventsfor example. Or cyber-crime. Both of these risks weren’t as likely to occur a decade ago. There is also the added complexity of supply chain disruption, which can result in interruption to your business operations if not managed properly.
Add to this ever-changing risk landscape the fact that these events are usually unexpected and can strike at any point, it’s not hard to see why, as an SME you may rightly be concerned about business interruption.
How can Business Interruption help SME’s?
It is thought that 40 per cent of businesses lack adequate business interruption cover*. Yet it can be vital in helping your business survive the effects of a disaster event which sees you being forced to stop your business operations for a sustained period of time.
Business interruption insurance can be so important because it looks to offer financial compensation to business owners who suffer a disaster event and have to cease trading for a period of time as a result. It will cover the loss of income whilst your business is closed.
Many businesses may overlook it, assuming other insurance products they have in place provide this type of cover. But in fact, a building or contents policy for example, will only provide cover for your physical assets. Not your business trading position.
To ensure that business interruption insurance can really benefit your business if the worst should happen, you need to ensure that you get the correct level of cover. Failing to get this right can see your business underinsured. Read our recent blog which looks at the factors you need to look at to ensure you get the right level of business interruption insurancefor your business.
Business interruption insurance shouldn’t be the end of the story either. Whilst insurance will be invaluable in protecting your business you need to ensure that your business is well prepared to cope in the event of disaster striking. This is best achieved through robust disaster recovery and business continuity planning. Speak to us at First Recoverytoday to see if we can assist you in putting your business in the best possible position to cope if the worst should happen.
*Building Cost Information Service and Chartered Institute of Loss Adjusters