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In the meantime, what it won’t do is keep your business operating or protect your cash flow in the short term. It won’t stop your customers going elsewhere or protect your market share. It won’t protect your reputation or replace the goodwill you’ve painstakingly built up, possibly over a period of many years.


And it’s a sobering thought that the sums paid out are often less than anticipated, and often don’t actually cover the full value of the losses incurred. So it’s vital that you clearly understand what your various insurance policies cover and, as importantly, what they don’t, so that you can supplement your risk management strategy with other appropriate mitigation measures. In any case, insurance shouldn’t be seen as a substitute for other mitigation measures. Often insurers will, quite reasonably, require you to have other measures in place to reduce the likelihood and/or impact of the insured risk(s) occurring – in other words, to reduce your, and their, risk of a claim arising.


The appropriate use of insurance is an important weapon in your risk management armoury, but it’s a big mistake to view it as the only weapon. And it should be seen as the last line of defence, rather than the first.


CHAPTER 4 67


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