Festive season risk watchlist for businesses

For many South African businesses, the festive season is the bearer of good news. For some, it’s a time of increased sales volumes and higher levels of foot traffic, and for others, wrapping up the year brings a welcomed reprieve from the daily grind and a well-deserved break for employees.

However, this period also comes with several seasonal risks that businesses should be prepared to mitigate by striking the balance between optimising their insurance coverage and implementing procedural safeguards to minimise any potential losses.

This is the opinion of Karen Rimmer, head of Distribution at PSG Insure, who encourages businesses to remain vigilant as the end-of-year period approaches. As she asserts, “Businesses need to be on guard to protect their business premises, their commercial fleet vehicles, as well as any larger-than-usual cash reserves and inventory held on site.

“Apart from these ‘external’ precautions, it’s important for all team members to be on board and to be trained in ways that equip them to identify and flag areas of concern promptly and proactively,” she adds.

A dual focus for a safe festive season

In terms of protection against the increased level of crime and other seasonal risks associated with the festive season, businesses need to employ a two-pronged strategy. First, it’s important to ensure their commercial insurance policy is tailored to account for the risks associated with their particular sector, geographical location and unique exposures.

In this regard, some businesses opt to increase the limits on their policies to cover certain seasonal fluctuations that are associated with their operational structure. For example, some businesses may need to account for increased exposures due to vehicles and stock being returned or stored at their premises over the end-of-year business closure period. In these cases, they would need to review specific policies, for example, their Motor and Plant All Risk cover, to ensure the increased level of risk is taken into account.

Reviewing policies, making adjustments for seasonal cover and requesting limit increases are considerations that should be made at the inception and renewal of the policy. Businesses should also discuss these considerations with a qualified adviser, who will be able to offer advice and guidance on how to manage seasonal risks on an ongoing basis.

Additionally, as Rimmer suggests, businesses need to hone their focus on employing the necessary measures to secure their valuable assets and ensure any security, surveillance and emergency response systems are in working order.

In the event of a claim, insurers will review whether systems such as electrical fencing or camera surveillance were properly maintained and fully functional at the time of an incident. In some cases, having these systems in place could also help reduce business’ monthly insurance premiums which, as Rimmer adds, is another reminder of the importance of fully understanding the terms and conditions of a commercial insurance policy.

“Advisers are insurance product experts, but they are also risk specialists in their own right. They play an invaluable role in helping policyholders to understand what their responsibilities are in terms of storing, protecting and maintaining their valuable property and assets to ensure the related risks remain insurable.

“Some of these measures include not only employing technology to help mitigate risk but also training staff members on how to co-operate and conduct themselves in a way that is conducive to keeping the business safe and secure,” she says.

Thankfully, technology can play a pivotal role in helping businesses protect their operations. For example, certain CCTV camera systems employ the use of artificial intelligence models that can detect and flag suspicious activity and movement.

And don’t forget cyber risk

Rimmer also encourages business owners to remain aware of cyber risk – especially over the festive period. With South Africa being one of Africa’s leading cybercrime hotspots, protecting company IT systems, customer and supplier databases and sensitive company information should be a top priority.

At the very least, companies should make use of strong passwords that are regularly updated.

“We typically think of cybercrime as a risk related to external vulnerabilities, but more often than not, the weak spots come from inside businesses themselves. Staff need to be trained on how to identify and flag phishing scams, for example, or learn how to verify the legitimacy of email communication and the use of websites. A strong team of vigilant technology users is a company’s best defence against cybercrime,” Rimmer concludes.