Business risks- Title

Running a business comes with its benefits and risks. Almost every business shares similar business risks that they should be aware of. Starting a business itself is a risk as it involves uncertainty; there are always chances that things will go wrong.

Business risks can be internal or external factors that can lower profits, cause reputation damage or lead the company to fail. Unfortunately, many business owners spend extensive time worrying about what might go wrong but don’t have suitable safety nets in place. However, at times these risks can be unavoidable.

It is crucial to analyse and have the proper protection plan to avoid and face business risks. One of the best ways to protect your business is by purchasing adequate insurances. But what are the business risks every company faces? The article will explain the top five business risks and the suitable safety insurance for each risk.

What Are the Top Types of Business Risks?

Cyber Risks

Cyber crimes are a risk faced by every business worldwide and one of the most dangerous risks. More than 40 % of Allianz Global Corporate & Specialty experts think cybercrime is the biggest business risk in 2022. A range of cyber attacks can break into servers online and ruin the company. No matter the size of a business, cyber threats can and will affect every business, with minor or major attacks.

Cyber threats 2022-Feature

Cyber attacks include phishing, malware, ransomware, and deep fake attacks. Each attack is as harmful as another for a business. The main goal for cybercriminals is to acquire data – names, passwords and financial records, then sold on the dark web. In fact, experts predict the cost of cybercrime to hit $10.5 trillion by 2025. 

It is a business risk that businesses can avoid with high-quality cyber security and the right awareness. However, sometimes, cyber security is not enough to stop expert cyber criminals; this is when a business should have a backup plan. The plan should include cyber insurance. Cyber insurance covers a business’s liability against a cyber attack involving sensitive customer information and helps recover from the attack. The policy is the perfect protection when faced with cyber risks and should be purchased by every business.

Liability Risks

All businesses have responsibilities to a large number of people, such as customers and clients – known as business liability. Liability can also be a business risk regarding a company’s product or service. It is a risk when an individual or business’s action causes bodily injury, death, property damage, or financial loss to third parties. In such cases, the third party can sue the company or professional, which causes a large amount of financial loss and reputation damage.

Liability-Insurance Risk

Some liability risk lawsuits include public, professional, and product liability. For example, if a customer slips and falls on a business’s premises or if a business product or service causes injuries and property damage.

All these liability business risks can happen at any point and are mainly unavoidable. However, companies can reduce the consequences of the risks with a range of liability insurances. The main liability insurances every business should have is public liability, professional indemnity and product liability insurance. The combination of these three insurance will cover the costs of liability lawsuits, such as defence, compensation and settlement costs. Liability insurances help the business recover without a large amount of financial loss or reputation damage.

Employee Risks

One of the unexpected risks and liability is employee risks. A business is responsible for its employees, especially while performing their duty. However, there are always risks that employees could suffer injuries during work or on the way to work. These injuries could happen in any industry, even when duties are performed in the office.


If an employee is injured due to their duty, the employer is liable to pay for their medical, salary and compensation costs. An employee deserves the best care from their employer, but sometimes due to the costs and budgets- an employer may not be able to provide the best medical and compensation care.

For this reason, employers should purchase employee compensation insurance to provide the best care without any financial worries. The insurance will reimburse the medical, salary and compensation costs, regardless of injury. This business risk can be costly to a business and its relationship with its employees; hence employee compensation insurance is a must.

Property Damage Risks

Another business risk that is a concern is property damage risks – especially with climate change. We have begun to see more natural disasters and unpredictable weather. Additionally, experts predict a lot more serious disasters due to the increase in global surface temperatures. These natural disasters include storms, hurricanes, typhoons, earthquakes, floods, etc. All these disasters can cause severe property damage to a business and the assets involved.

Property Damage risks

Property damage can ruin a business with the amount it costs to repair and replace. The property can include the premises, products, technology and fixtures. Unfortunately, it is a business risk that no one can avoid or predict. For example, the recent forest fires in the UK that are spreading and burning down many business properties.

Surprising business risks like these are devastating and can shut down a business permanently. Thankfully there is light at the end of the tunnel if companies purchase property all-risk insurance. The insurance will cover the repair and replacement costs of property and assets under the business ownership. During tough times it is essential to have a parachute that reduces the impact, and insurance is the parachute.

Business Interruption Risks

Property damage leads to a long business interruption. Business interruption is commonly a period of time a business is shut down due to an unfortunate event. These incidents could include a natural disaster, fire, flood, or cyber-attack. It is a worrying time for the business due to the pause in income during the interruption.

 Business Interruption Risks

Sadly, many businesses shut down permanently due to financial loss and lack of funds to keep operations running. Especially with the funds needed to promote a reopening after a long pause.

A business risk like this is stressful to any business unless they have purchased business interruption insurance beforehand. The insurance will cover the cost of lost income, salaries, rent and other outgoing expenses. Although, the insurance will not cover any pandemic-related interruption anymore. A business interruption can happen anytime, and businesses should be prepared.

How to Best Manage Business Risks?

It is crucial to be ready for these risks and understand the risks associated with your industry.

Therefore, the first step is identifying the different risks your business could face, including the mentioned five and more. Identifying risks can help your business take steps to avoid and manage these risks in the best possible way.

It is essential to calculate each risk’s damage and what actions need to be taken to reduce the impact — figuring out which threat is more dangerous than others because not all risks can be avoided. 

As mentioned, insurance is one of the best ways to protect your business when faced with these risks. Therefore a company must purchase different insurances that fit their business and specific risk.

Finally, after specific insurances have helped your business – it is time to create a new strategy for the future. Procedures to ensure certain risks do not happen again and the company keeps growing for the better.


To Learn More about business Insurance that can help you avoid business risks in Hong Kong and Asia, contact Red Asia Insurance.