By adopting ERM practices and establishing captive insurance entities, small and mid-market businesses can gain a comprehensive understanding of their risks, develop tailored risk management strategies, and have greater control over their insurance programs. This integrated approach enables these businesses to proactively address potential threats, enhance their risk resilience, and protect their financial well-being in the face of challenges and disasters. 7.3.3 Risk According to Google, the risk is defined as “a situation involving exposure to danger.” It is the possibility of an event or action leading to negative consequences or outcomes. It involves uncertainty and the potential for loss, harm, or failure in achieving desired objectives or results.
(Source: Ready.gov landing page for businesses as of March 2015) In the three columns, the chart above can be translated into Mandatory Risk, Operational Risk, and Strategic Risk: Mandatory Risk encompasses the insurance coverages you need for your business (i.e. If you own a property, you need property insurance): 1. General Liability: Provides coverage for claims of bodily injury, property damage, or personal injury arising from the company's operations or premises. 2. Auto Liability: Covers liability for bodily injury or property damage resulting from company-owned or leased vehicles. 3. Directors & Officers (D&O): Protects directors and officers from claims alleging wrongful acts, such as mismanagement or breach of fiduciary duty. 4. Property Liability: Covers physical damage to the company's property, including buildings, equipment, and inventory, due to perils like fire, theft, or natural disasters.
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