If you own a business, you need to spend some time focusing on financial risk management. Your business risks losing money through internal theft, chargebacks (when thieves use credit cards in your store and the card issuer refuses the charge), online scams, and countless other threats. Risk management involves assessing current threats and making a plan to minimize those risks. Here’s what you need to know.
Popular Financial Risks for Companies
To protect your company, you need to know which risks are most likely to affect you, and that varies based on your unique situation. For instance, if you accept checks, you may want to implement safeguards such as checking the account holder’s identification or banning people from writing checks over the amount of purchase. This is especially important if you have a very small company — 70 percent of check fraud happens to businesses that have less than 100 employees.
As part of your financial risk management plan, you should also educate your employees about phishing attacks. This is when a scam artist sends an email to your employees in an effort to try to get information about your company such as its bank account numbers. This risk is widespread. In fact, 76 percent of businesses had to deal with phishing attacks in 2017.
That said, external threats aren’t the only issue you need to consider. You also have to think about your employees or managers stealing money from you. Remember, internal theft costs businesses $50 billion per year.
Financial Risk Management and Cyber Security
Part of your financial risk management plan should focus on strengthening your cyber security. For instance, if you don’t have a password on your WiFi, a cleaver hacker can get on your network and track every keystroke that your employees enter. Similarly, if your system isn’t secure, hackers may get into your databases and steal information about your employees or your clients.
Then, they may sell that information on the dark web or use it to commit identity theft. That can hurt your reputation. If customers believe that you compromised their details, they may not be willing to shop with you. Once a breach occurs, you need to spend money finding the leak, fixing the technical side of the issue, and potentially paying for identity theft protection for your clients.
Protecting Your Business
Unfortunately, even if you identify all the risks and take steps to stop them, disasters can happen. To deal with those situations, the flip side of your financial risk management plan should detail what you plan to do if an issue occurs. For instance, if you have a cyber breach, you need to work through the steps mentioned above.
Regardless of the issue you face, dealing with the aftermath can be expensive. To get help covering those costs, you need insurance that’s designed to help with financial risk management, and Venture Captive can help. To learn about our innovative insurance options, contact us today.