As a business owner, you’re aware of the risks your business faces, and you likely have comprehensive insurance policies in place to help protect you from a wide range of adverse circumstances and events. These policies typically cover everything from worker’s compensation to professional liability, and even damage from natural disasters.
However, you may still be vulnerable to all kinds of risks depending on how well the various other companies you’re connected to are protected. Whether your main connections are suppliers and vendors, or simply other companies that you share information and records with, there are quite a few ways that oversights on their part can expose you to the real possibility of financial losses. Fortunately, there are several steps you can take to protect your business in these types of situations.
The first thing you need to do is to learn about your suppliers and associates so that you know exactly the level of the risk you’re exposed to. It may be that these other companies do everything right and have the proper coverages in place themselves, but you can’t assume that. Particularly when it comes to any company you share digital data with, you need to make sure they have good security systems in place and that they’re insured in the event those systems are compromised.
Diversify Your Suppliers
This information gathering may drive you to change suppliers, or it may leave you satisfied with your current situation. Regardless of that, though, you should look at ways to expand your options in case one part of your supply chain is compromised for any reason. Just because you’ve gone through this process once doesn’t mean you can forget about it, either. With technology developing at an increasingly rapid pace, and the severity and frequency of natural disasters and flooding increasing also, it’s a good idea to reassess your relationships with your suppliers on a regular basis.
Add Contingent Business Interruption Insurance
While it’s important to mitigate your risk from disruption in your supply chain as much as possible, it’s also wise to protect your company by adding a contingent business interruption insurance policy to your portfolio. This will cover you if your business is interrupted due to a disruption in your supply chain.
For instance, if you rely on a particular supplier for a certain raw material and your work can’t proceed without it, you will lose money if that supplier is unable to deliver on time. The delay in delivery may be the result of a computer or technical failure, a natural disaster, or a widespread transportation disruption. Regardless, you can recoup those losses through your contingent business interruption policy. There are quite a few other types of situations in which this can apply, and because you can only diversify your supply chain so much, it’s important to add this layer of protection as well to ensure your business isn’t seriously damaged by events completely outside of your control.
If you’d like to learn more about the range of contingent business interruption and other business insurance policies we offer, contact our offices today.