Whether you’re a seasoned business owner or a novice entrepreneur who’s new to the game, it’s important to be aware of the liabilities that may put your business at risk. Overlooking these problems makes your company vulnerable, and these vulnerabilities can lead to serious consequences. Identifying liabilities gives you the power to invest in prevention strategies and risk management solutions such as insurance. Consider the following seven liabilities that may affect your business.
1. Errors and Omissions
Errors and omissions liability is a specific field of risk that encompasses harm that occurs as a result of an employee’s error. If your company offers professional services such as consulting, for example, you may be liable for any damages that emerge as a result of the counsel you provide. This is why it’s imperative to offer legally sound advice and protect your business with an insurance policy.
2. Product Liability
Businesses that sell products for consumer use also face an array of liabilities. Product liability is an umbrella term to refer to all of these risks, including defective products and dangerous products. Customers who purchase these items and suffer harm from their use may initiate litigation against the manufacturer. To avoid this, companies must maintain stringent standards for safety in all product designs.
3. Premises Liability
If your business operates a brick-and-mortar store, you must contend with the unique risk of premises liability. This is the risk of injury that can occur due to unsafe conditions in a store. If there is a slippery floor without a wet sign warning, for example, a person could easily slip and fall, causing a major injury. The law firm of Burnett Law, P.A. represents clients in cases like this and advocates for justice. It’s important that businesses are held accountable for negligence that results in injuries. Consulting with a lawyer is a wise move for both businesses and injured individuals.
4. Fiduciary Duty
The financial services sector is subject to many regulations, and rightfully so. Businesses in this industry accept the responsibility of handling other people’s money, which can be a very risky endeavor for everybody involved. Unsurprisingly, fiduciary duty is a major liability for these kinds of companies. This refers to the responsibility of a financial professional to act in their client’s best interest. A breach of this duty may warrant litigation, and in some cases, criminal investigation, too.
5. Employment Practices
When the Equal Employment Opportunity Act was passed in 1972, it gave all job seekers the right to employment without regard for their race, gender, age, or religion. Unfortunately, though, workplace discrimination still exists, and it’s a massive liability for companies that recruit employees. Employers should prioritize diversity and give every applicant the chance to prove their qualifications.
6. Cybersecurity Incidents
Cybersecurity has always been a major issue for companies, but it’s becoming even more pressing as the frequency of attacks continue to arise. These attacks may come in many forms, including data breaches, ransomware, and hacking campaigns. If your company is the target of such as an attack, it’s a liability for both you and your customers. You need to invest in a robust cybersecurity infrastructure to ensure that sensitive data is protected from cyberattacks and unauthorized access.
7. Business Interruption
Nobody can predict the future, and this uncertainty can be a liability for businesses. You never know when a natural disaster may force you to halt operations. Illnesses and other phenomena can have this effect, too. Business interruption is thus a liability that every company must account for. It’s a good idea to build up your business’s savings or invest in business interruption insurance to prevent an event like this from causing financial devastation. You should also have a plan in place outlining the protocol for resuming business after interruption.
Being a good business owner demands more than just great sales skills. It also requires you to be aware of liabilities and invest in protection against these risks.