Risk Exposure & Management Liability - A Guide for Business Owners
Lisa Carter, Managing Director - Clear Insurance
Managing risk exposure is essential to shield you from personal liability.
What is your management risk exposure?
The responsibility of managing organisations has risks. They may include, flawed decisions, a failure to act, actions by or towards employees, theft of intellectual property or assets, fines, acting on poor advice, external audits, cyber breaches or insolvency. Risks may come from inside or outside the organisation, including suppliers, competitors or investors. Therefore, understanding how risks impact you is essential.
What can you do to mitigate management risks?
There are steps you can take to mitigate management liability risk. For example:
- .Ensure your organisation has robust and documented decision-making processes
- .Seek advice from respected experts in cyber, HR, managed IT, legal, finance and insurance
- .Provide adequate training, automate, document and monitor business processes
- .Implement dual sign -off procedures for purchases and decisions
- .Implement cyber safety training and protocols for breaches
- .Develop, test and implement business continuity plans
- .Consider whether to transfer your management risk exposure to a management or association liability insurance policy
What is covered by a Management or Association Liability Insurance policy?
A management or association liability insurance policy may include:
- Directors & Officers Liability
- Occupational Health & Safety
- Tax Audit
- Crime
- Statutory Liability
- Crisis Containment
- Employment Practices Liability
Loss Example - Employment Practices Liability
(Source: Australian Underwriter, Dual Insurance)
Four former staff made a claim against directors, managers and supervisors of a licensed club for failing to respond to allegations of bullying and harassment, seeking $200,000 compensation. The insurance clause was triggered. After long litigation, the matter settled with $20,000 compensation per claimant. The insured received $230,000 to cover the compensation and legal defence costs.
What can you do if you have concerns about your management risk exposure?
If you feel concerned, we encourage you to contact your insurance adviser or contact Clear Insurance for a no-obligation risk and insurance review for peace of mind. Contact Lisa Carter at lisa.carter@clearinsurance.com.au | ph: 1300 721 132 | www.clearinsurance.com.au
