Business First May-June 2017 Business First May 2017 | Page 33

Risk management is not an optional
extra for SMEs
Richard Willis of Belfast-based Willis Insurance and Risk Management warns of the dangers of not planning for worst-case scenarios.
mall and medium sized enterprises are
the lifeblood of the Northern Ireland
economy, making up the majority of
businesses in the region and providing
thousands of jobs.
For employers, keeping on top of
overheads, meeting wage demands and
staying ahead of the competition can be a
juggling act. It can be tempting, therefore, to
consider cutting back in some areas,
especially where resources are going towards
an intangible product.
In common with large companies, ignoring
the need to prepare for unforeseen events
can have huge and detrimental effects on
SMEs.
For that reason, the establishment of a well­
planned risk management strategy should not
be considered a luxury by business owners,
as Richard Willis, Managing Director of
Belfast­based Willis Insurance and Risk
Management (Willis IRM) explained.
The firm has been providing intelligent
counsel to businesses of every size across all
sectors in Northern Ireland for almost 40
years.
In addition to its traditional insurance
brokerage, Willis IRM has added new
divisions in recent years including
employment and HR services, therefore
providing a more complete service to clients.
Richard said that although requirements
differ from one client to another, one constant
remains – the need to adequately plan for
risks:
“As the Managing Director of an SME, I
know first­hand the balancing act involved
when it comes to prioritising costs and the
use of resources.
“For many business owners, it can also be
difficult to consider the worst case scenario
happening to their company due to the
emotional attachment they have to the
business.
“However, this approach merely increases
the likelihood of an unexpected event
resulting in major losses.
“By planning ahead and putting in place a
risk management strategy, companies can be
prepared for almost any scenario, therefore
safeguarding the future of the business.”
Richard said working with professional
partners to carry out regular risk
assessments, tailored to the needs of the
business and its sector, was crucial for any
company.
This process should include the
identification of existing and potential risks,
S
an audit of insurance policies held by the firm
and a review of HR practices to ensure
employment law is being followed.
He said a common outcome of such
assessments is a realisation companies are
underinsured:
“It can be tempting for business owners,
trying to keep a lid on costs, to underinsure,
albeit unwittingly.
“Many companies, regardless of the
industry they operate in, are placing their
own survival – and the livelihoods of staff
members – at severe risk by not providing
adequate insurance cover.
“The problem is widespread and perennial,
and an unexpected event can strike at any
moment, the consequence of which could
bring the shutters down on the business.
“Underinsured companies do have policies
in place, but these do not meet their
particular needs and often value the business
or assets at lower than their true value.
“And company owners often only discover
their business is underinsured when they
experience a major loss event, such as a data
breach, flood or fire, and need to make a
claim.
“Subsequently, the company is
compensated for less than the true value and,
depending on the shortfall in the insurance
payout, it could ruin the organisation
“By taking a proactive approach, businesses
can fix the gap and be prepared for almost
anything.”
Regularly updating strategies, meanwhile,
will ensure businesses adapt to keep up with
emerging threats.
Richard added: “In recent years, businesses
have had to become increasingly aware of
their cyber vulnerability.
“Data breaches are a growing threat to
businesses of any size and improving cyber
security and developing a bespoke action
plan are now necessary business practises to
offset the potentially huge losses of an
attack.”
There is an increasing awareness too,
Richard continued, of the need to keep HR
practices up to date:
“The importance of maintaining up to date
HR policies and procedures cannot be
underestimated.
“We work with clients to ensure compliance
across a range of issues including health and
safety training; employment contracts and
grievance procedures among others.
“Changes in legislation and case law means
regularly reviewing procedures is imperative,
and maintaining a high level of compliance
will reduce the risk of penalties and
workplace tribunal costs.”
Richard said the dangers posed by not
planning for the future could have a
devastating impact on small and medium
firms.
He added: “By following intelligent and
expert guidance, business owners can avoid
‘lights out’ scenarios and secure the future of
their company, and its employees’ wellbeing.”
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