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Risk Management

Have the Right Insurance

Insurance plays a vital role in starting, growing and sustaining your business.

Louise Pharo




SMEs are fundamental to job creation and South Africa’s economic growth. But their size and the many challenges associated with being an SME makes them vulnerable to unplanned crises such as fraud, crime, fire and floods.

The costs associated with these disasters are compounded by failure to protect the business adequately through appropriate insurance. It is critical to ensure that you have appropriate cover for your business. Although the greatest losses are experienced when a business is not insured, under-insuring your business, property or assets can also have a detrimental effect on your financial wellbeing.

If you, for example, insured your computers for R30 000 and they are worth  R60 000, you will only be paid out 50% of the value when you claim.

Use an intermediary

As an entrepreneur, setting up a business can be a costly affair and it’s important to get the right insurance cover to suit your business needs. Intermediaries exist to help business owners find the correct insurance cover, and to ensure there is sufficient cover should the need to claim arise.

Research shows that SMEs represent a vast portion of business in developing countries. In South Africa, SMEs account for about 91% of formal business entities, contributing more than 51% to the GDP, and providing almost 60% of employment. This is a vital sector that needs to be growing – not falling victim to unplanned for events.

Understanding the risks

Some of the risks that you should be taking seriously as an SME owner and discussing with your intermediary include crime, natural disasters (fire, floods), fraud and general liability insurance. To protect your business, follow a simple risk management process:

1. Identify all potential risks to your business.

These could include:

  • Natural perils (wind, storm, hail, lightning, flooding)
  • Crime related perils (burglary, armed robberies, theft of vehicles/hijacking)
  • Accidental damage (motor accidents, damage to computers)
  • Legal liabilities (due to products being sold/repaired, motor accidents where the insured/driver is negligent).

2. Evaluate these risks in terms of their likelihood and the potential size of the loss, for example:

  • The likelihood of having a motor accident is high and the size of the loss would be medium to large (a vehicle being written off as well as damage to a third party’s vehicle/property)
  • The likelihood of a fire at the premises is low but the size of the loss would normally be high to extremely high.

3. Apply proactive risk management. Using the information above, a business owner should decide whether some of the risks can be eliminated or reduced. Here are two examples:

  • Installing an alarm and burglar bars reduces the likelihood and impact of potential burglaries
  • Arranging with suppliers to deliver stock instead of collecting your own eliminates the risk of loss or damage to goods whilst in transit.

4. Finance the residual risks (ie. the risks that can’t be eliminated or reduced to an acceptable level.  The most common method of financing the residual risk is through dependable insurance.

What should be insured

This is dependent on the information gathered above, as well as the industry you operate in, but as a general rule:

  • Plant, machinery and equipment (against natural perils and burglary)
  • Stock (against natural perils, burglary, during transit)
  • Reduction in business turnover from damage or loss of stock, plant, machinery, equipment or buildings
  • Computers, cash registers and other equipment (against natural perils and burglary)
  • Loss of money
  • Motor vehicles (accidental damage, accidents and liabilities)
  • Legal liabilities.

Commonly overlooked areas

Don’t fall into the common trap of simply overlooking vital areas of your business. These include:

  • Underestimating the impact that damage to equipment, stock and buildings has on financial wellbeing
  • Forgetting to consider the legal liabilities of the business
  • Not adhering to the conditions set out by the insurance company, which could result in claims being repudiated
  • Forgetting to advise the insurance company of changes to the business (eg. a clothing store that starts selling fireworks, a change of address).

Calculating an asset of value

Not all assets should be treated in the same way:

  • Insure plant, machinery and equipment for the new replacement value (ie. the cost to replace the items with new items of similar capacity and design)
  • Insure stock for the invoiced amount
  • Insure motor vehicles for the reasonable market value (ie. the amount the business owner would be paid for a second-hand vehicle in a similar condition).

Five key tips for insuring a business

  • Always declare all relevant information to your intermediary, no matter how small the detail.  Indicating all the risk reduction measures you have implemented will indicate that you are serious about your business and will assist you in negotiating a preferential premium.
  • Always spend time identifying all exposures to your business. Do this with your intermediary as he/she will have insight that you may not have when it comes to business insurance.
  • Always act as if you are not insured.  Insurance should be used for large catastrophic claims that are difficult to predict and avoid, not for small, regular losses as this would result in premium increases.
  • Reduce premiums by taking appropriate precautions, like installing proper security measures and fire precautions.
  • If you are prepared to pay a higher excess, you could negotiate a premium reduction.  Ask your intermediary for advice as you also need to bear in mind the impact on your cash flow, should you suffer a number of losses in a short period of time.

Risk Management

How to Take Risks That Win (Almost) Every Time

Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour.




Looking 13,000 feet down out of an airplane, parachute pack secured, your heart beating in your throat, must be one of the most terrifying experiences imaginable. Though not all risks are life-threatening, all risks are frightening. As humans, we’re constantly afraid of failure, of doing something wrong and of having to deal with the consequences. Yet, at the same time, there is nothing more rewarding than reaping the benefits of a risk gone right – of landing safely ground, to build the earlier metaphor.

For entrepreneurs, risk taking is a necessity of the job. After all, we’re never quite positive that things are going to work out the way we envision. We make choices daily which affect our business, and we can never be absolutely sure that we’re making the right ones.

Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour. While risks are unavoidable, approaching them strategically can be the best way to decrease your parachute’s chances of failing, so to speak, and to produce measurable results that you would never have achieved had you avoided the risk in the first place.

Related: Dream Big, Plan Well, Minimise Risks Says Braam Malherbe

In order to hone your risk-taking skills, here are some guidelines:

1. Information is your friend

The more knowledge you have about any given topic, the less risky your endeavours will ultimately be. For example, many of the most steadily successful brokers on Wall Street are those who understand the patterns of the market better than anyone else. While there are always going to be those people who make millions off a risky uninformed bet, they are the same people who most likely will lose all their earnings on a single trade. Traders who build a sustainable career for themselves are the ones that have deep knowledge of the industry.

Similarly, you should be an expert in your field. You should know your industry well – your product or service you are providing. You should understand the buying patterns of consumers, their motivation and pain points. What drives them to buy your products? Where and when do they buy? What makes them stop buying?

As an entrepreneur – or in any profession that requires risks, really – you’ll want to have as much information as possible. The more you know, the fewer unknowns there are. The unknowns, ultimately, are what makes an action risky.

2. Assess the risk carefully

While risk is a reality of life, there is also something to be said for strong assessment skills. Being able to look at a risky situation and decide whether or not it’s worth taking is a hallmark of a good businessperson.

Venture capital investors, for example, spend their entire careers deciding which companies are worth risking time and money on. Those who throw their money around recklessly, while admirable for their risk-taking, are not necessarily the most successful investors.

Being a good risk-taker involves using the information you have to assess a situation and decide whether or not the risk is worth it.

Related: 5 Infamous Risks Every Entrepreneur Must Face

3. Learn from failure

Appreciate that all risks are learning experiences. Especially those that don’t pan out.

On some accounts, failure is actually more valuable than success. While failures may not lead to an increase in your bottom line, you can use the opportunity to glean important information about what you’ve done wrong, where you misstepped and how you can move forward in the future.

The biggest mistake many people make is seeing failure as a measure of who they are, rather than a measure of where they can go. We’ve all heard that failure is feedback. Most successful entrepreneurs failed at many ventures before they created that million-dollar offering. Most overnight successes took many years to make. If you take a risk and fail, learn from it. Ask yourself what you can do differently next time, and then move on. The only failure is not learning the lesson that it provides and using it to hone your next endeavour.

According to Mark Zuckerberg, “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

Taking risks is the only way to go from here to there. Even failed risks move you closer to your goals if you can turn that failure into valuable learning and a plan for improve your results next time.

This article was originally posted here on

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Risk Management

Are You Focusing Too Much On The Little Details (And Forgetting The Bigger Picture)?

To what degree do outside influences impact your business’s success? As a business owner, should you be focused on your business, or taking a macro view of the world?

Nicholas Haralambous




Entrepreneurs live in the daily grind of their businesses. This is unavoidable but can often be fatal. Day to day we think that the little things matter more than the very big things do. A little thing like the floor of your office or store being mopped daily can become a huge issue if not done.

Sure, these things are important because they create a culture of care and pride, but what you might be missing while you watch your team mop the floors is the macro-economic climate shifts that happen more rapidly than you think.

Step back to move forward

Early in the life of a new business the only way to survive is for the founders to do absolutely everything. From designing a logo and launching a strategy all the way through to writing tweets and emailing customers when there are issues.

This makes sense when you’re building a business, your team is small and your cash is tight. However, as you grow, it becomes important to let your people do their best and take on the day to day work.

Related: Expanding At The Speed Of Stress

As an obsessive entrepreneur it’s often hard to let go of these little details. Day to day operations will always be integral to the growth of your business and an important part of someone’s job in your organisation. However, it shouldn’t be yours if you are taking care of the big picture.

As the leader of your business you need to take a step back from the grind and look at the world around you.

To truly understand the positioning of your growing business you need to understand your country, continent and world.

You should understand the economic position you’re in as well as that of your province, country and even the markets that might directly influence your sales. Get a good understanding of the political stability of your country and the world.

Finally, you should figure out if there are any large- scale impending disasters. If disaster is imminent, like Zuma pillaging a nation and tanking an economy, then you have to get your head out of the floor mopping and into the high-level strategy of survival and preparation for disaster.

Move the needle


Every day there are 24 hours that you can fill. You can choose to work during that time and faff with the things that were once important, or you can figure out what is going to move the needle in your business.

What is going to really help you survive and grow in the years to come? Founders, CEOs and leaders need to be thinking about the next three, five and ten years. Let your team worry about today. Let the smart people you work with make today and tomorrow and next week work.

Chances are, the things you are doing in the hours/minutes aren’t saving your business or moving the needle. It’s the things that you plan for the next six months that affect the next five years.

Related: 8 Rules To Build Wealth When You Weren’t Born Into Money

Don’t live in a bubble

It’s easy to fall into the trap of thinking that you live in an isolated country or region that isn’t affected by world events. Unfortunately, no matter how hard you close your eyes and hide your head under the pillow you can’t avoid the fact that your business exists in a globally connected environment.

At Nic Harry we were affected by the Brexit events that unfolded in the UK and Europe. British shoppers were scared and didn’t spend their money when they were on holiday in Cape Town over the peak holiday season. I was so busy preparing for the seasonal uptick that I missed the link between a huge global event and my sales.

You live in a world that is filled with online shoppers and tourists who visit your business whether you know it or not. Prepare for the world to start having an effect on your business more and more.

Broaden your view

I am always fascinated by the narrow view of the world many entrepreneurs display. I may sell men’s socks, accessories and style but that doesn’t mean that the mining sector doesn’t affect my business.

Related: How To Plan, Prioritise And Get It Done Now

Even if you were an entrepreneur building a business in Antarctica I would urge you to read about oil prices, political world events and the intricacies of overfishing in the South American seas. Being well rounded and having a broad view of the world and your business can only make you a more robust thinker who sees more angles to exploit, protect against and thrive on.

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Risk Management

Why Adversity Is Actually The Best Thing For Your Business

There’s been a lot of talk about privilege lately: What is it? Who has it? Who doesn’t have it? I have a slightly different take on privilege and prefer to frame it as the privilege of adversity.

Allon Raiz




Studies across the globe show that the minorities in all contexts have higher rates of entrepreneurial activity than the incumbent majority. There are a host of reasons for this, but one of them is that adversity creates resilience and self-reliance that are vital for entrepreneurial success.

Every successful and exponentially successful entrepreneur that I have met or read about has transitioned through a baptism of fire. They have overcome insurmountable obstacles and used the lessons gifted through their experiences to rocket their business to the next level.

Related: Approach Adversity Head-On

The Five Gifts Of Adversity

A sense of where your true limits are. These are always far beyond what your belief system believed them to be. The experience of testing your limits breaks the preconceived notion of where your limits are or were.

Confidence. Once you have overcome an issue, the experience of overcoming it builds a high level of confidence that should the issue reoccur, you will have the ability and resources to overcome it. For example, if you lose your biggest client and manage to keep your business afloat, the next time you lose a big client you will not panic or become despondent, but will instead kick into action and claw your way out again.

Insight. Insight as to which of your non-financial resources you can tap into. When the chips are down and money is nowhere to be found, it’s amazing how many resources you will now perceive around you that can potentially help you transition to success. These resources come in the form of advice from friends, access to new markets through networks, credit from suppliers, and free promotion through networks, to name a few.

Your relationship with your own resourcefulness. The experience of not having resources but somehow manufacturing some out of thin air, recalibrates your sense of your own resourcefulness, which in turn builds a level of confidence that should you be dropped off in the middle of the desert with only a matchbox and a magnifying glass, you will survive.

Related: Learn to Adapt In The Face of Adversity

Faith. A level of faith and a belief system that there is always a way to overcome a problem. This is true no matter how overwhelming the problem may be. The more you overcome impossible problems, the less you’ll believe in the existence of impossible problems.

So instead of worrying about who has privilege, who doesn’t, or what privilege actually is, use the lessons gifted to you when overcoming insurmountable obstacles to propel your business forward.

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