By Favour Nnabugwu
Operators in the Small and Medium Enterprises (SMEs) sector in Nigeria have been urged to take up insurance policies that can help them to continue operating in an uncertain and extreme times.
Dr. Femi Oyetunji, the Group Managing Director of Continental Reinsurance Plc, made the call during Access Bank Plc and Coronation Insurance Plc’s webinar themed ‘ Managing Business Risks at a Time of Uncertainty ‘
He identified the following top SMEs business risks are :
* Property damage
* Reputational risks,
* Business interruption
* Supply chain , including
He emphasizes on the need for Keyman policy, saying ” for most SMEs, everything revolves around a person, not necessarily the business owner. It could be the master baker in a bread industry.
The keyman knows everything about the company in his head, and tomorrow he may decide to leave, and what would you do if he suddenly left?
“So, be sure that if anything happen either the keyman suddenly walked away or the death of the owner, you still want to be able to generate income. So, be sure to take up keyman insurance,” he said.
Further, he urged the business owners, to consider” diversify your products and your locations, and instead of importing the raw materials for your product, consider local content that you can use for substitute, because you don’t want to be exposed to a particular source, and in terms of the transfer of money and to be sure you can deliver your product to customers. ”
On Currency Risk, he noted : ” You can’t transfer this risk . It is best to have zero tolerance for the regulator,and be a good business person .
” Property Damage: Don’t cut costs at the point you need it most. The best thing is for you to locate your business where it can be protected, such as in a class – A rated office facility with fire extinguishers. Although, it may be more expensive, yey it is beneficial.
” Cyber Risk: With technology comes cyber risks . Nevertheless, you can invest in modern technology for production , packaging and delivery of your product, such as bread.”
He urged insurance practitioners, not to just sell their products to SMEs, rather, our number one objective is risk management ; we want to sell our products after we have work with you to reduce your exposure to risks as much as possible.
“So, insurers should look at the risks, and what the other options are to transfer the risk to another entity. The entity can come in various forms- reinsurance companies, derivatives, and linked securities,” he said.