Businesses don’t fail, their insurance does

Any well-managed enterprise, global or local, has a Consolidated Insurance Programme (CIP) that contains all the necessary and relevant insurance coverages for the risks associated with its existence, operations and relationships.

This is best practice and the minimum standard for enterprises with international colouration and expansive cross-border operations, which face risks of diverse dimensions.

For example, there are insurance coverages for reputation risks that may crystallise, including Directors and Officers Liability Insurance, Professional Indemnity Insurance, Product Liability Insurance, Business Interruption Insurance and recently, Cyber Security Insurance.

When an enterprise, conglomerate or large, that millions of customers rely on, directly or indirectly, secures its existence, operations and relationships with necessary and relevant insurance coverages at every point, it has positioned itself against business failure.

Studies have revealed that the failure of most businesses are resultant from mismanagement and compromise of corporate governance guidelines over time.  What could happen whether through the intentional or unintentional acts of the executives are anticipated, hence the need for Directors and Officers Liability Insurance, which many enterprises do not have because it is not made compulsory by the relevant regulatory bodies despite several cases of business failures due to executive rascalities.

No enterprise is too big to fail, so it is important to consider their state of health based on the types of insurance they have per time.

Today’s successful enterprises are run on the basis of solid risk management and insurance frameworks and we feel secure to relate with them because they are indeed secured by necessary and relevant insurance coverages, sometimes, unknown to us.

Global brands like Apple, Amazon, Uber, Tesla and Dangote understand the essence of insurance to the resilience of their enterprises and they consider it at all levels.

When businesses fail, the simple autopsy is to check the status of their insurance programmes and you will see that the absence of certain insurance coverages at certain times in the lives of these enterprises permitted their journeys to the failures.

We fail to discuss the failures of start-ups, small and medium enterprises that do not go beyond 3 years from the perspective of insurance because the knowledge of the workings of insurance have not been well taught in our business schools and shared in business conferences and workshops.

Those who know often say, quite informally, that “Insurance is the best kept secret of business”. True? I think so.

Business is a risk and managing it successfully for decades requires the enterprises to have risk management and insurance frameworks right from the beginning and ensure executives are trained to think accordingly, even as technology continues to enable us. Ultimately, enterprises and executives dare when they know insurance is there.

The time to advise you as a business owner, entrepreneur or executive to just buy insurance is waning, and thankfully, with Embedded Insurance, we can enhance our interactions on insurance towards having you rethink the foundation of your enterprise.

To be clear, our enlightenment and education of the public on insurance for our lives and businesses will continue; however we expect more business owners and executives to better understand the value of insurance today beyond the coverage of properties and persons.

Meanwhile, capital, as we are realising, is no longer enough to keep businesses up and running. We are getting to appreciate and understand this, similarly as regulators do, so it is necessary that business schools and educators undertake deeper studies of insurance and its ability to ensure enterprises thrive and survive, and thrive.

As our world changes to release more complexities and challenges, we need to dig deeper into traditional offerings that mankind discovered and utilised successfully, like insurance, before we allow mistrust to erode their benefits thus increasingly prodding us to rather trust technology.

Insurance walks through enterprises and works for enterprises that are committed to a lifetime of excellent customer service and continuous improvement in customer experience.

Maybe you should check today what the status of insurance of your enterprise is, and consequently consider taking insurance coverages that might be absent now.

Businesses do not fail, it is the absence of insurance coverages that ought to be in place, which exposes their frailties and we describe the situation in that same old term, failure.

It is time to make insurance work for us, our small and medium enterprises and emerging conglomerates to avoid failures and their multiplier effect.

*This article was first published by Proshare