Risk is part of the small business game and if you want to be in business, you simply have to be risk-tolerant. Indeed, as a wise man once said, “An entrepreneur is a person willing to take a risk with money to make money.” Risk is in the job description.
Part of that risk is personal – you risk your reputation on your business. Part of the risk is financial – your business is your livelihood. Part of the risk is financial and legal – if things don’t work out, you could be on the hook personally. And part of the risk is technological – cybercrooks are after you.
But, that said, there are ways to help reduce the risk inherent in business.*
For starters, get properly insured: Should the worst occur, you will be very happy if you have the proper type of cybersecurity protection insurance. For example, Allstate Business Insurance offers a variety of cyber-focused protection products to help protect businesses in a virtual world. Specifically, Allstate CyberSuite* offers the broadest amount of protection due to a cyber event, including
- Data compromise
- Cyber extortion
- Identity recovery
- Network security liability
- Computer attack
- Computer fraud
Indeed, technological risks today are not insignificant:
- Ransomware cost the global economy almost $500 billion last year, much of that stemming from attacks on business
- Ransomware attacks were up 300% last year
- 60% of all cybercrime is now directed at small business
There are ways to mitigate this risk. Aside from proper insurance, here are two additional steps you can take. First, be sure to get a good cybersecurity software package installed on your business’ computer system. This is vital. Second, backup your data daily to the cloud; that way, if you ever are hit with a ransomware attack, you will still have all of your vital information and data.
What about legal risks? To the extent possible, avoid lawsuits – as both a plaintiff and a defendant – at almost all costs. Yes, there are times you may have to sue, or are sued. But by and large, as a general rule, lawsuits are expensive, exhausting, exasperating, emotionally draining ways to “resolve” disputes. They can bankrupt companies, and even when you win you can lose.
Risk can additionally be managed by being smart in other ways:
- Incorporate: Creating an LLC or an S or C corporation creates a firewall between you and the business. Business debts will not be considered your own personal debts.
- Put it in writing: Whatever “it” is, it should be in writing. Why? People’s memories fade over time, people remember things differently, and people lie. Your writing is your proof.
- Lawyer up: You will not regret having a good lawyer on your team. A sharp attorney can not only steer you away from trouble, he or she can also protect your physical assets, intellectual property, and so on.
The bottom line is this: When you think about great entrepreneurs, it seems like they are big risk-takers. And some were – Steve Jobs for instance. But great entrepreneurs also know this: There is a difference between a wild risk and a smart one, and the savvy entrepreneur always looks to bend the odds ever in their favor by reducing risk to the extent possible.
* Coverages are subject to state availability and qualifications and may vary by state. All claims for coverage are subject to applicable state and territory laws, policy terms, conditions and exclusions. Coverages are subject to state availability and qualifications and may vary by state. All claims for coverage are subject to applicable state and territory laws, policy terms, conditions and exclusions.