Two ways to manage your business risks

Accidents. Surprises. Losses. They all come with the territory of owning your own business. But there's no reason you have to be a "victim" of these unexpected losses, not if you take advantage of three key ways to manage your risks.


One, you can finance risk

One approach to risk management involves purchasing enough insurance to transfer responsibility for losses to your insurer. Click to learn more about insurance, an essential aspect of risk management.

Two, you can transfer risk

Where appropriate, you'll want to shift the responsibility for risk to your lessors, vendors, subcontractors, competitors and even your customers. Here are some tips on how to transfer some of your business risk to others.

Lease business property and equipment. Depending on the leasing arrangement, your property and liability risks may be assumed by the lessor.

Use "just in time" delivery. If your business permits, and deliveries are not very time sensitive, a risk management technique that might prove useful would be to require vendors to store merchandise and materials at their sites until you need them. Or, if you are in the packaged goods trade, ask your supplier to drop-ship merchandise directly to your customers.

Transfer risk to your customer. Your lawyer can discuss ways to transfer ownership and risk of goods that have been sold to a customer but which remain on your premises. Also, pay careful attention to your warranties to make sure they protect you.

Hire the right subcontractors. Employing knowledgeable, properly insured subcontractors can reduce your workers' compensation risks and minimize high risk product liability exposures. Request Certificates of Insurance to verify that your subcontractors have adequate insurance.

Consider "hold harmless" agreements. A "Hold Harmless" agreement is a risk management tool that shifts legal and financial risk from you to another party. Consult you lawyer about these types of contracts.

Don't try to be all things to all people. Let your competitors take the chances on potentially dangerous projects or ventures.