As the year draws to a close, business owners must review and update their insurance coverage to ensure they are adequately protected against the evolving risks of the upcoming year. Here are the key insurance considerations to help your business prepare for a fresh start in 2025.
1. Review and Renew Policies
- Policy Expiration Dates:
- Check the expiration dates of all your insurance policies, including liability, property, and cyber insurance. Ensure that you renew or update these policies before they lapse to avoid any gaps in coverage.
- Coverage Limits:
- Assess whether the current coverage limits are sufficient for your business. Consider any changes in your operations, such as new assets, expanded services, or increased revenue, which may require higher coverage limits.
- Policy Terms and Conditions:
- Please review the terms and conditions of your policies to ensure they align with your current business needs. Look for any changes in deductibles, premiums, or exclusions that might impact your coverage.
2. Assess and Mitigate Risks
- Emerging Risks:
- Identify and assess emerging risks that could impact your business in 2025. These include digital disruption, cyber threats, geopolitical uncertainty, and climate-related risks. Use frameworks like PESTLE to evaluate the political, economic, social, technological, and environmental factors affecting your operations.
- Direct and Indirect Pressure Drivers:
- Consider both direct and indirect drivers of risk. Direct drivers include financial impacts, business opportunities, and specific regulations, while indirect drivers involve public opinion, politics, and social impact. This holistic approach helps understand and mitigate risks more effectively.
- Extended Enterprise Risks:
- If your business relies on third-party vendors or partners, assess the risks associated with these relationships. Ensure you have a comprehensive Extended Enterprise Risk Management (EERM) program to manage risks related to business continuity, financial solvency, health and safety, and intellectual property breaches.
3. Cyber and Digital Risks
- Cyber Insurance:
- Given the escalating cyber threats, especially in asset-intensive industries, it is essential to have robust cyber insurance coverage. This includes protection against data breaches, ransomware attacks, and other cyber-related risks. Ensure your policy covers the costs of incident response, data recovery, and potential legal liabilities.
- Digital Transformation:
- As your business adopts more digital technologies, ensure that your insurance policies cover the associated risks. This includes risks related to AI implementation, IoT devices, and other digital tools that could expose your business to new vulnerabilities.
4. Regulatory Compliance and Governance
- Regulatory Changes:
- Stay updated on any regulatory changes that may impact your insurance needs. This includes compliance with data protection laws, cybersecurity regulations, and other industry-specific requirements. Ensure your policies and procedures align with these regulations to avoid compliance issues.
- Governance and Risk Management:
- Strengthen your governance and risk management practices by integrating risk management into your business strategy and decision-making processes. This involves establishing clear risk policies, setting up governance mechanisms, and ensuring continuous risk sensing and monitoring.
5. Preparing for New Ventures
- Business Expansion:
- If you plan to expand your business in 2025 through new products, services, or geographic locations, ensure your insurance coverage is adjusted accordingly. This includes assessing new risks associated with the expansion and updating your policies to cover these risks.
- Innovation and Technology:
- Consider the insurance implications as you adopt new technologies or innovate your business model. For example, integrating AI or IoT into your operations may require specialised insurance coverage to protect against these technologies’ unique risks.
6. Operational Resilience
- Business Interruption Insurance:
- Ensure you have adequate business interruption insurance to cover potential losses if your business is forced to close temporarily due to unforeseen events such as natural disasters, cyber-attacks, or supply chain disruptions.
- Supply Chain Risks:
- Assess the risks associated with your supply chain and ensure you have the necessary insurance coverage to mitigate these risks. This includes risks related to supplier insolvency, logistics disruptions, and geopolitical uncertainties.
7. Employee and Talent Risks
- Workforce Changes:
- With the shift towards a more contract-based workforce, ensure your insurance policies cover the associated risks. This includes workers’ compensation insurance and liability coverage for contract workers.
- Talent Attraction and Retention:
- Given the challenges in attracting and retaining talent, consider insurance products that support employee benefits and well-being. This can include health insurance, life insurance, and other benefits that help retain key employees.
Preparing your business for 2025 involves thoroughly reviewing your insurance coverage to ensure you are protected against the evolving risks and challenges of the new year. By assessing emerging risks, updating policies, and preparing for new ventures, you can position your business for resilience and growth. Remember to stay informed about regulatory changes, integrate risk management into your business strategy, and leverage advanced technologies to enhance your risk management capabilities. With a proactive and comprehensive approach to insurance, you can confidently navigate the complexities of 2025.
About RBS
Risk Benefit Solutions, better known as RBS, originated as an entrepreneurial-focused services business in 1998 and today is one of the largest fully-fledged black-owned insurance brokers in South Africa and a Level One B-BBEE contributor. Celebrating 25 years in business this year, our growth has contributed to offering clients a unique approach to risk management by positioning our skilled resources as an extension of our client’s risk management team. Our company covers various services, including Insurance Broking, Risk Management, Commercial and Corporate Risk Advisors, and Corporate Vehicle Hire Services. With its head office in Cape Town, RBS has offices in Gauteng, the Eastern Cape and globally, represented through its board membership with WING (Worldwide Insurance Network Group).