Mitigating risk & reducing employee claims for commercial clients

According to Dun & Bradstreet, in Q2 2022, the Global Business Impact (GBI) score increased to 315, up from 297 in Q1 2022. The GBI ranks the biggest threats to business based on each risk scenario’s potential impact on companies, assigning a score to each risk. As businesses continue to acknowledge the rising risk landscape, it is important for founders to take preventative measures surrounding these risks and potential employee claims.

Our recent report, the 2022 Startup Risk Index, found that 25% of VC-backed startup founders are most concerned with employee issues such as harassment, wrongful termination and team burnout among others in 2022.

As employers continue to struggle with managing remote versus in-person employee working conditions around the United States, it is expected that employee practices liability insurance (EPLI) claims will continue to rise. In fact, data from the Equal Employment Opportunity Commission (EEOC) shows that EPLI claims have increased every year since 2003. EPLI claims include any employment-related claims such as wrongful termination, discrimination, workplace harassment and retaliation.

The easiest and most cost-effective way for businesses to mitigate and manage employee claims is to have a good EPLI policy to protect the business in case a lawsuit is filed against the company. Certain insurance providers offer more than just EPLI policies — they can provide resources for businesses to help bolster their HR departments such as https://enquiron.com/.

It’s also paramount for companies to check in with their employees on a regular basis, consult with legal counsel when implementing or updating policies and ensure proper communication with staff, which should include providing them with a safe, confidential space to share concerns and voice complaints before they get out of hand.

But internal risks aren’t the only thing businesses need to worry about.

Our survey revealed that operating capital and costs currently weigh heavily on the minds of startup founders as well. Around a quarter of founders cite increased debt, rising costs and inflation as some of their top business risks for 2022. And while there is no one-size-fits-all insurance answer to these risks, businesses should be looking to increase their policy limits based on inflation and take proactive and reactive action to maintain proper insurance coverage. Insurance claims can decimate funds that could have been used to get businesses through economic downturns such as these.

Businesses need to have a risk and response strategy in place to help address the growing internal and external risks in the market. Our report found that seeking help from advisors (32%), controlling growth (30%) and prioritizing risks (30%) are the top three strategies founders identified as their preferred ways to mitigate business risks.

Setting goals and controlling growth based on those goals is crucial for every business. According to Inc., some of the dangers of going full throttle without a clear plan in place can lead to losing track of finances, cash flow mistakes, ineffective business operations, poor hiring decisions and general mismanagement. It’s essential for businesses to keep their insurance policies up-to-date depending on their size. As businesses grow, they need new and more robust policies to protect them.

Operating in a slow-growth environment

All companies should prioritize risk. According to the International Monetary Fund, global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. Businesses should acknowledge this and keep an eye on the ever-changing work environment as one simple way to anticipate what risks they should prepare for next. It’s essential for business leaders to evaluate the risks they’re seeing against business conditions to determine which are more likely to occur and which pose the greatest impact on their individual company.

The most recent U.S. Supreme Court ruling overturning Roe v. Wade has brought new risks to businesses. In fact, our most recent report Risk, Reputation and Reproductive Rights found that even though over one-third (36%) of founders said they wished they could make adjustments to support their staff impacted by the decision, they currently lack the resources. To help mitigate the risk, another 31% of founders plan to increase benefits and care options for their employees.

Some degree of risk is unavoidable for businesses, but ignoring that risk increases the volatility of outcomes and potential damage. Sixty-five percent of founders admit that risk is an inherent part of business and is necessary to grow. And while risk is necessary, so is having a plan in place to protect all stakeholders from the fallout as a result.

Source: https://www.propertycasualty360.com/2022/08/16/mitigating-risk-reducing-employee-claims-for-commercial-insureds/