Business owners face a variety of risks including fraud and lawsuits. Learn ways to avoid these stressful and expensive losses.
Date Posted: July 8, 2021
Farm Bureau Insurance
Reducing Risks to Your Business
Two of the largest risks business owners face are lawsuits and employee fraud. Both can cause a great deal of stress and are usually expensive losses.
We recommend the following tips to help you avoid these risks:
Employee Fraud
- Institute an anti-fraud policy. A policy, published in an employee handbook, helps prevent insider theft.
- Educate employees on how to report fraud. Employees need to understand how to report any suspicion of fraud or theft and the guidelines for doing so.
- Incorporate trust within corporate culture. Maintain an atmosphere where employees feel trusted and valued and are rewarded for their loyalty.
- Compartmentalize job functions. When the same person both approves and pays invoices, it is easy for a crime to be committed. Adjust employee roles accordingly.
- Consistently review your records. Utilize your accountants to survey employees, asking if they are aware of any fraudulent activities.
- Investigate suspicious employee activity. Your human resources team can help initiate an investigation within the company.
Liability Lawsuits
- Form an asset protection plan. Create a list of potential assets you could lose from a lawsuit compared to your current insurance coverage. Review the plan with both your insurance agent and lawyer to limit your exposure from both an insurance and legal perspective.
- Separate your personal assets from business assets. Although this action won’t limit lawsuits, you might be able to remove your personal assets from a lawsuit settlement.
- Purchase appropriate Liability insurance. Contact your insurance agent to determine which excess coverages can best protect your business.
- Form a risk management plan. Identify and eliminate unnecessary risk within your workplace. From performing repairs to enforcing safe workplace policies.
- Specify your policies. An employee handbook should be available to all staff which clearly lists any policies directed to them, your customers, or the public.
These are a few steps anyone can take to reduce their company's liability exposure. Contact your agent today for expert advice on your Business Insurance needs.