How to Become Chief Risk Officer for Small Business Clients

Some small business owners are expressing their intentions to invest in future growth, as economic storm clouds of the past few years show signs of clearing. The National Federation of Independent Business’ latest optimism index found that 20 percent of small business owners plan to increase business spending in coming months.

While small business owners assume many key roles, from Chief Executive Officer to Head of HR, it’s arguably of equal importance that they don the “Chief Risk Officer” hat during business expansion. As business owners are not always likely to be aware of the increased risks they face as they expand operations or enter new markets, independent insurance agents add significant value for their clients by sharing their expertise regarding new or growing risks.

The opportunity to provide valued guidance is great. A recent survey of small business owners conducted by Travelers shows that most owners generally look to others — attorneys, accountants, peers — for advice and guidance on managing risk. Believe it or not, only one in 10 small business owners turn first to their insurance agent for risk management guidance. It’s clear that a great opportunity exists for agents to become a more prominent risk management resource to their small business clients.

Agents who share the role of risk manager have much to gain by maintaining good relationships with their clients, as this could result in business leads down the road. Here are three ways that agents can add value and help their clients manage risk.

1. Stay in touch: Something as simple as checking in on a regular basis to stay on top of their business needs can help agents build strong relationships with their small business clients. Owners focused on everyday business tasks generally forget or underestimate the benefit of staying in touch with their agents. Often, they only reach out to their agents once a year when it is time to renew their policies. For businesses that have expanded, hired new employees and invested in new equipment, ensuring their policies are updated to cover the expanded liability is vital in the event of a disaster Ð so a phone call once a quarter to check on the state of a business can make a significant impact. If agents don’t call, owners will direct their questions to their attorney, friends or other trusted advisors. If agents are not making the call, their competition probably is. Agents who don’t make the call potentially lose an opportunity to demonstrate their value and offer their expertise.

2. Keep up With Changing Needs: Small business owners are resilient, and despite the economic uncertainty, they continue to remain entrepreneurial. A recent survey by Discover Financial Services found that 40 percent of small business owners have considered modifying their business models or making changes to their lines of business.

As business models change, so do business risks, which can lead to new opportunities for insurance agents. By maintaining an open dialogue on a regular basis, agents can make sure their clients are covered for any additional risks they may be taking on as their businesses grow and evolve. Becoming the trusted advisor has its benefits, as it helps agents build their book of business by giving clients a reason to recommend them to peers.

3. Help Prepare for the Unexpected: When vacation months arrive, and owners take much needed time off from their businesses, they temporarily turn over management of the office to their staff members. As a client’s risk management advocate, agents can help build a business continuity plan to protect against a potential disaster situation should one arise while they are at the beach or on the slopes. These situations can range from weather-related incidents such as snowstorms or tornadoes to equipment issues such as a fire or a computer system crash.

While business continuity plans may seem obvious to an agent, these guidelines, which are used to drive the recovery process of a business, are often overlooked by smaller organizations. In fact, the same Travelers survey referenced earlier found that almost half of small businesses (44 percent) are operating without a business continuity plan.

By helping clients develop a plan of action, agents have the opportunity to grow their business by earning referrals and deepening relationships that can yield long term benefits.

Gibbons is vice president of Travelers Small Commercial – Field, Product Management and Distribution.