As a management consultant, part of your job may be identifying and helping your clients avoid risks to their businesses, but mitigating risk for your own business is an area you shouldn’t overlook.
Understanding the Risks Management Consultants Face
1. Mistakes and dissatisfied clients
Nobody is perfect. That includes clients and consultants. Mistakes, misunderstandings, and miscommunications are just a few events that could negatively affect your consultant business. While tact, transparency, and honesty can often resolve many issues, it’s not unheard of for a dispute to escalate to a lawsuit.
Even if you’re fortunate enough to win in court, you could still be saddled with legal fees and other expenses (not to mention time away from running your business).
2. Cyberattacks and data breaches
News of companies being hacked or having their data compromised looks to be a frequent occurrence. And it’s not just large corporations that are at risk. Many small businesses are popular targets for cybercriminals.
As a consultant, information you store electronically could be at risk. For example:
- Client payment information — credit and debit card numbers
- Personal identification information — names, addresses, and Social Security numbers
- Client business information — revenue and expense reports, employee and company accounts
Even if you don’t electronically collect and store client information, your business could still be in the sights of bad actors. The use of ransomware and denial of service attacks can shut down or block access to your own systems and affect your ability to conduct business online.
3. Third-party accidents and property damage
This can be an area of concern for just about any business, but it may not be one you put at the top of the list of management consulting risks. However, if a client trips, falls, and is injured while visiting your office, for example, you could be responsible for medical costs and other damages.
The same can be true if you’re at a client’s location and you damage their property in the normal course of business.
4. Damage or theft of your property
Take a look around your office or workspace. The computer, coffeemaker, the tables and chairs — even the rugs and draperies. Now imagine looking around that same area and discovering all of that has been stolen, damaged, or destroyed due to theft, vandalism, or an accident.
Not only you might have to pay to replace or repair the items, not having them available to you could affect your ability to conduct business and serve your clients.
5. Employee injury or illness
If you have employees and they are hurt or become sick on the job, you could be responsible for the associated costs. Those could include medical expenses, as well as the costs for rehabilitation, lost wages, and more.
How to Avoid and Mitigate Risks
1. Mistakes and dissatisfied clients
As with many relationships, setting expectations can help avoid disappointment and dissatisfaction down the line. Making sure you and your client know what to expect from each other is a good place to start. Creating clear and comprehensive engagement letters and contracts are good ways to facilitate that.
Even with the best intentions, mistakes and errors can happen, so it can make sense to have financial protection in place with professional liability insurance. It can provide coverage for damages and legal costs for mistakes or negligence claims.
Even if you’ve done nothing wrong, a client could still sue you. Your professional liability insurance could help cover the legal costs to defend yourself.
2. Cyberattacks and data breaches
There are several best practices you can follow to help reduce the effects of a successful cyberattack. We recommend this helpful guide to get you started.
However, even one successful cyberattack can seriously affect your business, so we recommend cyber liability insurance. This type of financial protection can help cover claims associated with stolen customer data, cyberattacks, breaches, and fraud.
If you’ve suffered a data breach or other cyberattack, the required responses can often be expensive and time-consuming. For example:
- Finding and fixing the breach
- Notifying their clients
- Providing credit monitoring for affected clients
- And more
With our online quote form, there’s an excellent chance we can provide you with a cyber insurance quote in under 60 seconds.
3. Third-party accidents and property damage
Ideally, you’ll never have to deal with accidents or property damage to someone else’s property. To help in that area, we recommend this guide. In case the unexpected does happen, we also recommend general liability insurance.
This foundational coverage can help handle costs from third-party accidents, property damage, and bodily injury. It also can cover instances of personal or advertising injury, such as stolen ideas of claims and invasion of privacy, libel, slander, and copyright infringement related to advertising.
4. Damage or theft of your property
Almost every business owner wants to protect their own property. Including business personal property coverage as part of your insurance portfolio can help cover the costs of replacing or repairing equipment, furniture, fixtures, and inventory that you own, use, or rent inside your workspace.
5. Employee injury or illness
If you have employees, it’s natural that you want to take care of them. At the same time, you also want to take care of your business. That’s where workers’ compensation insurance can help. Workers’ comp is designed to financially protect your business and help take care of employees who get sick or injured on the job.
Workers’ comp is often required by law for full-time and part-time workers. However, each state has different requirements, so we recommend checking with your state government to find out how those laws may apply to your business.
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When it’s Time to get Covered, we can Help
Small business insurance is what we do. We built our online platform as a one-stop resource for the coverages many small businesses need. In just 10 minutes, we can help find a business insurance quote for management consultants like you.
You can compare coverages from leading national insurers and choose the one that works best for you. If you have questions or need help choosing, our licensed insurance agents are a call away at 844-654-7272, Monday-Friday, 8 a.m.-8 p.m. (ET).
If you’re looking for more information regarding protecting your management consulting business, here are some resources we recommend:
A General Liability Insurance Guide for Small Business
How to Help Protect Your Small Business from Dangerous Cyber Threats
What is Professional Liability Insurance? A Guide for Small Business Owners