We recently presented the top two emerging risks in business throughout 2022, in Part 1 of this two-part series. Due to the depth of exploration we take in uncovering the critical threats that exist currently and will evolve in the future, we’re proud to now offer the remaining emerging business risks for 2022 in Part 2, below.
Let Barrack Broking clear the path forward for your business, so you can stay one step ahead of the risk curve.
3. Natural catastrophes
Natural catastrophes cause widespread losses, often with both physical damage and operations being shut down for long periods. As digitalisation increases, the effect of natural disasters is becoming worse. If one country has a disaster, it can affect the supply chain in other areas.
In 2021, an Allianz study showed that natural catastrophes led to losses worth $80 billion globally. It’s little wonder that natural catastrophes are one of the biggest causes of business interruption.
It’s possible to categorise natural disasters into those with advance warning, and those that occur with little to no time to prepare.
The risk of disasters such as cyclones and floods often become known before damage occurs, with government alerts issued to allow for the preparation and implementation of physical protection and disaster response protocols. There is often little chance to prepare or reduce the impact of more sudden disasters such as earthquakes and tornados.
Here’s how natural catastrophes can affect your business (if unprepared):
Physical property and asset damage
Natural disasters can do substantial damage to physical property, including your business premises, buildings and equipment. Equipment such as computers, monitors, other electronic equipment, doors, furniture, and walls can get damaged during severe weather, and there can be time-consuming and costly clean up involved.
Destroy raw material
Natural disasters can damage raw materials, which leads to a business loss. For instance, cold weather, frosts or hail can damage crops, and bushfires can damage timber plantations. If you’re a business owner or retail business that relies on raw material, you should check if your insurance covers this loss.
Supply chain disruptions
Floods can wash away roads and railway lines, causing a delay in shipment and production. Your business may suffer reputational harm if these delays lead to unsatisfied customers, not to mention serious impacts on cash flow. They may even demand changes in contractual obligations.
Limit employees from working
One of your biggest business assets is your people. Natural catastrophes can prevent workers from attending work or operating at their optimum levels. Factors such as power and internet outages can lead to financial losses.
A business can suffer from indirect and direct losses due to natural disasters. You need to ensure that your company prepares to mitigate the impact of natural disasters.
Here are ways you can prepare for a natural disaster
● Know which disasters are most likely to occur in your workplace. Next, think of steps to minimise damage to your facility and arm your employees.
● Have an evacuation plan using primary and secondary routes and exits that are easily accessible. Ensure there is a plan for staff members with physical limitations as part of your safety procedures.
● Have emergency contact information for fire, police, and ambulances.
● Back up your customers, suppliers, distributors, and other critical business data.
● Understand your business insurance policies and how they apply to every damage. You can engage a consultant to design an effective risk management strategy to obtain comprehensive insurance cover.
4. Pandemic outbreak
The COVID-19 pandemic outbreak remains an ongoing business concern. Many businesses have adapted and are well-prepared for further outbreaks. The goal for most companies is to enhance company continuity management. However, a pandemic outbreak increases the risks of social unrest, cyber-attacks, and workplace and health changes.
Here are disruption risks from further pandemic outbreaks in 2022:
The rate of cyber attacks increased during the pandemic due to an increase in digitalisation. Rapid digitalisation in micro, small and large companies changed interaction among staff, customers and other stakeholders. E-commerce and video-conferencing are part of the new norm.
An increase in digitalisation has increased businesses’ cyber exposure and attacks. Cyber attacks introduce the company to sudden outages and potential financial losses. This is why cyber liability insurance should be part of your small business insurance pack.
Workplace and health changes
The pandemic affected the health and well-being of workers. Businesses suffer from low productivity, and need to be vigilant in managing workforce safety. Remote working can reduce productivity and morale, which is a significant risk financially.
Flexible working hours and remote working remain a necessity at this point, and many businesses are still learning how to retain company culture and creativity. Additionally, it is critical to identify how to motivate your workers to maintain productivity.
Due to altered work conditions, isolation, and economic changes, mental health issues are also a problem. Workers can suffer from anxiety and depression, putting the business at significant risk of lost productivity.
It is critical to manage the pandemic risks and reduce their impact in a future outbreak.
Here are some ways to manage the pandemic outbreak risks
● Create a pandemic preparedness team that stands for every crucial company function. The team should evaluate the necessity of business activities and arrange them into tiers for response or recovery.
● Monitor changes in the COVID-19 outbreak from reliable sources such as WHO (World Health Organization).
● Review financial forecasts and immediately inform investors and suppliers about economic issues that may occur. Ensure your business has the working capital to manage an outbreak.
● Ensure your workplace follows any regulations concerning hygiene. Also, provide hygiene supplies around your company to avoid the spread of an outbreak.
● Prepare for 40% employee absenteeism in case of any problems. You can also be open to giving your employees a remote work program or extra sick leave.
● Prepare IT actions like cloud options, remote data centre management, and chat options.
5. Changes in legislation and regulation
Changes in legislation and regulation can affect the business prospects and value. Your business needs to stay updated with changing public health information to ensure compliance with laws and regulations.
Legislation and regulation changes can prove to be a risk for companies that don’t comply. Businesses can suffer severe penalties, and this includes Directors and Managers who have heightened responsibility for meeting regulatory obligations.
Here’s how you can keep up with legislation and regulation changes
● Employ an in-house legal official. You can hire legal experts at regular intervals to review if your company is complying with all the necessary laws and regulations.
● Train your staff. Ensure that your employees have information on changing rules. Hold seminars and send company emails when there are changes in legislation and regulation.
● Purchase specialised software. Invest in software programs that specifically help businesses comply with crucial regulations concerning your industry. A compliance management software constantly tracks, monitors, and audits if your company processes align with the law, policies, and standards.
The program alerts you if there are changes you need to know about and monitors the following:
● Introduction of new and amended legislation
● Regulatory guidance
Protect your business risk with Barrack Broking!
2022 presents businesses with emerging risks that can lead to significant financial losses.
Do you need help to protect your business from emerging business risks in 2022?
At Barrack Broking, we recommend risk and insurance solutions for your business — specialising in group, large company and small business insurance cover
We offer the following services:
● Alternative Risk Transfer & Captives- Alternative Risk Transfer (ART) is the use of strategies other than traditional insurance and reinsurance to transfer your risk. This is particularly helpful in minimising your professional indemnity insurance and public liability insurance needs.
● Claims Management & Consulting – we create a strategic insurance program in unfortunate claim events. You will have satisfaction with how your insurance policy handles your claim throughout the claims process.
● General Insurance Broking– we develop a Business Insurance Program Strategy to ensure that your policies will cover your current and future business risks, to suit your financial situation.
● Merger & Acquisition Services – we partner with clients to help them understand the liabilities, synergies, and risks associated with mergers and acquisitions.
● Risk Consulting – we provide risk consulting services to businesses to help them better understand their risk environment and proactively prepare.
Contact Barrack Broking now to make sure that you’re receiving the professional advice you deserve when it comes to your business insurance policy.