As entrepreneurs, business-owners are irrepressibly optimistic – always seeing new opportunities. But it's just as important to have an accurate idea of every potential risk associated with a new opportunity. Otherwise, financial disasters can't be ruled out. As an insurance broker, I'm the professional doom-monger who'll challenge business-owners about their risks.
Although we carry the label of ‘insurance broker’, it’s more correct to see us a risk consultants. After all, that’s exactly what we do: identify as many disaster scenarios as possible and tell the business-owner about them. They usually have the most optimistic scenario in mind. This positive attitude isn’t just a feature of entrepreneurship, it’s also a key requirement for coming up with innovative new ideas. So it’s up to us to point out any issues to them that may pose a risk to achieving their goals.
A risk doesn’t have to be obvious to be relevant. It can be big or small, occur frequently or rarely, have a minor or major impact. The measures adopted are geared to all these possibilities. A risk that occurs frequently requires direct measures. If it occurs rarely, we should look at the potential impact. The probability of a fire breaking out may be small, but the consequences are huge. It can destroy someone’s life’s work in the blink of an eye. What it comes down to is taking measures to minimise the impact. As risk consultants, we offer solutions to real risks so that business-owners can sleep peacefully at night.
We counter the optimism of the entrepreneur with a healthy dose of realism. By asking a series of specific questions. In our role as risk consultants – or rather – as professional defeatist – we present them with a downright pessimistic scenario.
A food company insures itself against business interruption following a fire, for instance. The cover we propose gives the business-owner the assurance that if the worst happens, they’ll receive a sum that will at least cover their overheads. So that – in a catastrophic situation – they can concentrate fully on the recovery. What if we hadn’t warned them seriously enough and they had opted for an indemnity period of 12 months whereas it took two years for their business to recover?
To properly identify the risks involved, we start by asking the business-owner a lot of standard questions. For example: what if they need to find new premises when there are hardly any properties on the market? What if there’s no second-hand machinery available to replace their damaged infrastructure? What if it takes ages to get new licences?
With these standard questions, we force the business-owner to take a realistic view. It’s also important to bear in mind that not all risks can be covered by insurance. Some things, like existing damage or whether or not a particular product is a success, simply can’t be insured.
Every year Vanbreda Risk & Benefits processes over 30,000 claims. This enables us to spot risks that are dismissed by business-owners as trivial. Or to point out risks to them of which they aren’t yet aware.
The latter category includes cyber risks. Most clients haven’t yet been bothered by them much if at all. But there have already been lots of attacks, often without the business-owner realising what was going on. Competitors have also sometimes struggled with a tricky cyber problem but kept it out of the press. This increases the sense of inviolability of other business-owners operating in the same sector. Even if they have been alerted to the imminent danger. They’ll be less likely to consider a cyber policy if they haven’t been a victim yet.
This illustrates a very common misguided approach: business-owners look to the past, when they should be looking to the future. In the example of cyber crime: the world is becoming increasingly digitalised. There’s a very real chance that you’ll fall victim to such an attack sooner or later. As market leaders, we have an unparalleled view of new trends in the rapidly evolving world of insurance across many areas. Our experts react quickly by developing innovative products to cover or limit new and future risks.
In conclusion: you can inform a business-owner about the risks they run, but it’s always up to them to decide what to do about it. Some say: ‘I know it’s a risk and I’ll learn to live with it.’ Quite right. At least as a professional pessimist, you’ve made them aware of the risk that may be looming.