Business First May-June 2017 Business First May 2017 - Page 33

Risk management is not an optional extra for SMEs Richard Willis of Belfast-based Willis Insurance and Risk Management warns of the dangers of not planning for worst-case scenarios. mall and medium sized enterprises are the lifeblood of the Northern Ireland economy, making up the majority of businesses in the region and providing thousands of jobs. For employers, keeping on top of overheads, meeting wage demands and staying ahead of the competition can be a juggling act. It can be tempting, therefore, to consider cutting back in some areas, especially where resources are going towards an intangible product. In common with large companies, ignoring the need to prepare for unforeseen events can have huge and detrimental effects on SMEs. For that reason, the establishment of a well­ planned risk management strategy should not be considered a luxury by business owners, as Richard Willis, Managing Director of Belfast­based Willis Insurance and Risk Management (Willis IRM) explained. The firm has been providing intelligent counsel to businesses of every size across all sectors in Northern Ireland for almost 40 years. In addition to its traditional insurance brokerage, Willis IRM has added new divisions in recent years including employment and HR services, therefore providing a more complete service to clients. Richard said that although requirements differ from one client to another, one constant remains – the need to adequately plan for risks: “As the Managing Director of an SME, I know first­hand the balancing act involved when it comes to prioritising costs and the use of resources. “For many business owners, it can also be difficult to consider the worst case scenario happening to their company due to the emotional attachment they have to the business. “However, this approach merely increases the likelihood of an unexpected event resulting in major losses. “By planning ahead and putting in place a risk management strategy, companies can be prepared for almost any scenario, therefore safeguarding the future of the business.” Richard said working with professional partners to carry out regular risk assessments, tailored to the needs of the business and its sector, was crucial for any company. This process should include the identification of existing and potential risks, S an audit of insurance policies held by the firm and a review of HR practices to ensure employment law is being followed. He said a common outcome of such assessments is a realisation companies are underinsured: “It can be tempting for business owners, trying to keep a lid on costs, to underinsure, albeit unwittingly. “Many companies, regardless of the industry they operate in, are placing their own survival – and the livelihoods of staff members – at severe risk by not providing adequate insurance cover. “The problem is widespread and perennial, and an unexpected event can strike at any moment, the consequence of which could bring the shutters down on the business. “Underinsured companies do have policies in place, but these do not meet their particular needs and often value the business or assets at lower than their true value. “And company owners often only discover their business is underinsured when they experience a major loss event, such as a data breach, flood or fire, and need to make a claim. “Subsequently, the company is compensated for less than the true value and, depending on the shortfall in the insurance payout, it could ruin the organisation “By taking a proactive approach, businesses can fix the gap and be prepared for almost anything.” Regularly updating strategies, meanwhile, will ensure businesses adapt to keep up with emerging threats. Richard added: “In recent years, businesses have had to become increasingly aware of their cyber vulnerability. “Data breaches are a growing threat to businesses of any size and improving cyber security and developing a bespoke action plan are now necessary business practises to offset the potentially huge losses of an attack.” There is an increasing awareness too, Richard continued, of the need to keep HR practices up to date: “The importance of maintaining up to date HR policies and procedures cannot be underestimated. “We work with clients to ensure compliance across a range of issues including health and safety training; employment contracts and grievance procedures among others. “Changes in legislation and case law means regularly reviewing procedures is imperative, and maintaining a high level of compliance will reduce the risk of penalties and workplace tribunal costs.” Richard said the dangers posed by not planning for the future could have a devastating impact on small and medium firms. He added: “By following intelligent and expert guidance, business owners can avoid ‘lights out’ scenarios and secure the future of their company, and its employees’ wellbeing.” 31