Insurance and risk management go hand in hand. While risk management examines possible risks in your business venture, along with ways to manage it, insurance is one of the most common ways to reduce this risk. Risk management firms provide contingency analysis on protecting businesses from possible loss of property, employees and other assets. They will also tell you what sort of risk insurance you should purchase.

According to the principles of risk management and insurance, you need to systematically discover what risks your business is prone to, which risks are most likely and should be dealt with promptly, and how to best implement risk mitigation—including which insurances to buy in order to protect your business. Once you realize there is a need to protect your assets from risk, there are three steps you can take:

1. Hire an insurance and risk management expert.

2. Purchase insurance for business risk management.

3. Find risk management articles (like this one), along with tools you can use.

Action Steps
The best contacts and resources to help you get it done

Hire an insurance and risk management expert

Risk management consultants are the first step to learning how to handle your business' risks. A good consultant will tell you what your insurable risks are, as well as help you prevent non-insurable risks. Some consultants specialize in corporate risk management, while others have more experience with medium- or small-sized businesses.

I recommend: ABD Insurance and Financial Services has risk management consultants who are experts at analyzing insurance as risk management; they help you pinpoint insurable risk areas and minimize those risks in your business. BPS also offers credit and business risk advisory services. The IMA Financial Group helps your business learn to accommodate all of OSHA's rules, trains in safety management and industrial hygiene, consults on fleet safety and helps with property and fire protection.

Purchase insurance for business risk management

If your business doesn't already have general liability insurance, or if you need more specialized risk insurance, find a company that can offer you an excellent insurance risk management policy. Keep in mind your consultant's advice, and even run the policy past your consultant before purchasing.

I recommend: FM Global offers risk insurance, including a global, all-risk policy. Risk Management Insurance offers liability insurance through most of the major insurance providers.

Use insurance and risk management tools

Sometimes it's smart to hire your own, permanent risk consultant, or to implement some common risk management tools yourself. There are a number of free or inexpensive tools available online for examining business insurance risks. Especially if you can't afford to hire a consultant, strongly consider buying a good risk management software program.

I recommend: CCH offers insurance and risk management advice, plus a useful tool: an "insurance policy inventory worksheet" that helps you determine what your current insurance already covers. Risk Management Toolkit sells software that helps to identify and manage business risks; the software was original designed for the Air Force's Electronic Systems Center.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Small businesses should not neglect to recognize that their biggest risk is often the death or injury of the sole proprietor or one of two or three partners. Because this can cripple the business or the business-owner's family, small business owners should implement risk mitigation by having adequate disability and life insurance.