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  In a previous article, I wrote on the 4 insurance covers every Nigerian business will need. In it, I highlighted the four main covers I believe are important to every business. These include General Liability Insurance, Vehicle Insurance, Property Insurance, and Life/Health Insurance.
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Every business needs the above four insurance covers to ensure it can survive any major loss. However, not every business can take out an insurance cover. When it comes to insurance covers, you have to be strategic to ensure you are making smart decisions that will help your business in the long run. Realizing the toll taking out these four insurance covers could take on the financial state of certain businesses, I will, in this article, show you four strategies to apply in your business to manage your risks without having to take out an insurance cover. Please note, these strategies contained in this article are only advised if taking out insurance is not financially wise for your business. As a business owner, you must commit to doing your due diligence at all times. Seek out financial advice from a financial expert to help you weigh the pros and cons of taking out an insurance cover for your business, both in the short term and in the long term.

The Four Strategies

The four strategies presented here are drawn from the book, “Insurance For Dummies”, authored by the Insurance and risk management specialist, Jack Hungelman. According to Jack, these four strategies could be summarized as ARRT – Avoid, Reduce, Retain, Transfer.


This is the first strategy advised by Jack in this book. Most of the risks that face businesses could be avoided simply by an intentionally designed approach to that effect. While growing up as a kid, one of the risks I saw my father work tirelessly to avoid was the risk of a fire outbreak within the house. His strategy was never to allow gasoline into his house for any reason. For that reason, we never did have a gas cooker while growing up. That was his way of avoiding the risk of fire outage in the house. As a business owner, what risks can you avoid in your business? For instance, you can avoid the risk of burglary in your office by engaging the services of security personnel to guard your office space.
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To reduce here, as a strategy in business risk management, is to intentionally lower the chances of a loss occurring or to lower the extent of losses to be recorded if it occurs. For instance, you can reduce the risks of an accident occurring by ensuring you only drive your business vehicle in good conditions or ensuring the driver of such a vehicle is well trained and is not reckless. There are many ways you can reduce risks in your business, carefully determine these.


As a strategy in business risk management, retaining risks involves you absorbing and taking up the cost of the losses. This strategy is best when in your analysis, such a risk will not adversely affect your business or in your consideration, the object of consideration does not hold much value to require taking out insurance for it. Also, you can retain risks within your business that has low or no chance of occurring.


This strategy involves you moving the risks from your business to another. There are so many risks you take on that you would be better off transferring to another. For instance, the risks that come with transporting an item to a customer could be transferred from your business to a logistics company. Also, the risks of storing cash within your office space, either in a safe or vault, could be transferred to a bank, after all, that is the reason they exist.


As a business owner, you must choose your risks wisely. Determine the risks that you could avoid and avoid them, reduce the ones you could, retain the ones you can, and transfer risks that could be transferred. If you cannot avoid, reduce, retain or transfer risk, please choose a worthy insurance plan. At all times, understand the situations and circumstances around your business, and seek out specific advice for your business. Featured Image Source: Get Insurance NG
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This article was first published on 21st January 2022


Ifegwu-Mbonu Victor is a Personal Growth and Leadership Trainer who provides training and coaching to individuals and organizations.

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