Getting Started
minimising loss
Insurances
Having appropriate and adequate insurance cover cannot be a substitute
for pro-active loss prevention, but insurance can be part of your risk management
plan. The objective is to minimise costly and stressful problems and reduce
insurance claims and costs. There are basically two types of insurance to
consider:
- risk insurance, which is primarily personal insurance cover; and
- general insurance, which covers loss or damage of assets.
As a general rule, most small businesses need coverage for property, liability and loss of income. To establish the type and amount of insurance you need, consult your insurance agent or broker. Make sure your business insurance is separate to your personal insurance.
Risk management
Both the lender and the borrower face risks when money is borrowed. The lender's risk is that the loan will not be repaid, or will be paid late, or that it will cost a lot of time and money to collect payment. The borrower's risk is that they will not be able to make the repayments, and the lender will call in their security, or sue for recovery of the monies outstanding. All parties to a loan need to take appropriate steps to protect themselves, and minimise their risks.
It is good business practice to have a risk management strategy. Risk management involves identifying and analysing the things that could expose the business to loss, making contingency plans, and taking action to reduce those risks.
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