The COVID-19 pandemic forced many small businesses to adapt their operations, including taking extraordinary steps to preserve employee and customer safety. While these resourceful actions were often necessary, they could also introduce new risks that require careful insurance considerations.

As we begin to glimpse what a post-pandemic world might look like, now is an excellent time to evaluate the adaptations that may remain in place and ensure they don’t expose your business to unnecessary risks.

If you made any of the following operational shifts in your business, it is important to understand the associated new risks to your business.

Enabled employees to work from home

The pandemic led to a mass exodus from workplace offices to home offices, and for good reason – it kept employees safe while giving them the flexibility to keep working. However, allowing employees to use their personal or company devices at home could present cybersecurity risks.

Two of the fastest-growing cyber threats to small businesses are phishing and ransomware, according to the 2020 Data Breach Investigations Report from Verizon. Over the past few years, cybercriminals conducting phishing attacks have become better at targeting victims, disguising their sender IDs, and using persuasive messages. Ransomware attacks have evolved from simply encrypting the victim’s data to also exfiltrating it – or transferring it from the company’s systems to the criminal’s – and threatening to make it public.

As cybercrime has risen, so, too, have its costs. According to a 2020 Ponemon Institute report, remote work has increased the average cost of a data breach by $137,000. The impact of a data breach can be existential to a small business without cyber insurance.

Invested in cloud-based solutions

With more employees working from home, you may have increased your usage of cloud-based solutions. Examine your contracts to understand how responsibility for data security is apportioned between you and the cloud service provider. If a data breach occurs, you want to know in advance if your vendor will pay any of the associated costs.

Entered into a formal or informal partnership with another company to tide you both over during the pandemic.

Such partnerships could include joint ventures, promotional tie-ins, or sales of each others’ products. Partnership agreements can involve sharing of data, which leads to concerns about data security and breaches. In addition, any commingled operations could create new risks from an insurance perspective.

Began using a new supplier

The pandemic put many vendors out of business or seriously hobbled their operations. To continue meeting its customer commitments, a business may be forced to switch to new suppliers. Changing suppliers can affect many business areas, including customer contracts, product liability, and data access.

Changed the mix of products and/or services offered

New products come with new and sometimes hidden liabilities, as do expanded services like e-commerce, home delivery, or curbside pickup – which many businesses began offering for the first time in 2020. Any of these new offerings can have implications for the kinds of insurance coverages you carry, including Workers Compensation and Auto Liability. Enabling e-commerce on your website exposes you to new risks since you may now be storing your customers’ personally identifiable information (PII) or credit card information.

Thankfully, one way to help protect your business from these risks is by updating your insurance coverage.

Small businesses have unique risks, including some that the pandemic has exacerbated. An independent insurance agent who understands your business and your risk profile is one of the best business partners to have. A recent study from Selective and Appalachian State University found that 55% of small business owners or managers preferred to do business with an independent agent. An independent agent can provide expert advice and guidance about new exposures your business may face in the post-pandemic era and help ensure that customized insurance policies appropriately cover your risks.

Small business risks are continually evolving. It is essential to take time to think about how your business has evolved through the pandemic and what exposures you may have or will have in the future. A review of your coverages is a key consideration to ensure you keep protecting your business well into the future.

Mike MacMullin is Vice President of Small Business at Selective Insurance. He leads insurance programs that help small businesses mitigate risks and protect their livelihood. Connect with Mike on LinkedIn.

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