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Disaster Hits, and 75% of Businesses That Failed to Plan for It Are Doomed

Understanding and managing risk isn't an option but a necessity for small business leaders.

The reasons for this are:

  1. The numbers show that 75% of businesses that fail to plan how to survive a disaster - won't.
  2. The numbers also show that most small-business owners spend less than 10% of their time in risk management.
  3.  Because of No. 1 and despite No. 2 - Of the number of hats that multitasking entrepreneurs must wear because there's nobody else to do so, the top hat of all may be that of chief risk officer.

While large corporations have experts to fill every role from HR manager and mail clerk to CEO and CIO, small-business owners are often left to fill multiple roles singlehandedly. One responsibility that many small-business owners unknowingly have is that of the chief risk officer. According to a recent survey by Travelers, most small-business owners (60%) feel they are able to make the time necessary to effectively identify and manage operational risks, however more than half (55% percent) spend less than 10% of their time identifying and preventing business or operational risk. But especially in today's economy, risk management should land at the top of a business's priority list.

Marc E. Schmittlein, president of Travelers Select Accounts, offers these four tips to help small-business owners plan for and manage business risks.

  • Tap into advisers. Make use of industry experts the company works with, including independent insurance agents, lawyers and accountants, as well as other small-business owners. Each can offer invaluable advice on managing risks as the business changes and grows.
  • Plan, plan, plan. Developing a business plan is vital, but it is equally important to develop a Business Continuity Plan, which provides a set of actionable guidelines that steer a business through the recovery process and get operations back to normal after a disaster. Almost half (46%) of small businesses are operating without a business-continuity plan, a scary statistic, considering SCORE (Service Corps of Retired Executives) data suggest 75% of businesses without a such a plan close their doors permanently within three years of a disaster.
  • Communicate frequently. Touching base with advisers every six weeks gives owners the opportunity to update them on the business and gives them a chance to offer advice on managing business developments. Keeping employees involved in risk-management plans, including the Business Continuity Plan, is also extremely important. If the owner happens to be away when an accident or disaster occurs, employees need to know where they can access important information and whom they should contact. 
  • Be resourceful. Make use of free risk-management resources available from a number of industry organizations and companies. The Small Business Administration ( offers local resources; SCORE ( provides advice across the small business spectrum; Travelers ( Insurance hosts a risk-control lab online; and the Institute for Business and Home Safety ( offers disaster-specific tools and tips. Ask advisers for other resources.

Managing risk is a central part of running a successful small business, so owners need to make sure they are managing it effectively. They can be the company's own chief risk officer by surrounding themselves with trusted advisers, planning ahead, keeping the lines of communication open and identifying and utilizing the resources at their disposal. They don't want to let poor risk management take away the business they have worked so hard to build.

Travelers Select Accounts is the small-business division of Travelers Insurance.  For more information, visit

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