It might sound a little funny if you were to tell someone that you are busy “digging for holes” but that’s a skill you practice everyday if you own a business. Part of the boss’s job is to snoop around and identify any holes in your operation; issues which could seriously harm your company.

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Ottawa - March 22, 2012 - It might sound a little funny if you were to tell someone that you are busy “digging for holes” but that’s a skill you practice everyday if you own a business. Part of the boss’s job is to snoop around and identify any holes in your operation; issues which could seriously harm your company.

For example, if you’re a manufacturer and rely on a single market for your product, that might be a serious hole to plug. After the Japanese earthquake and Tsunami, some automotive parts manufactures watched helplessly as their one and only market was unable to take delivery. It soon became apparent which companies were prepared with alternate markets for their product and which ones weren’t.

Your business might face other risks. If you suffer an equipment breakdown, you might be able to handle the downtime for a few hours or perhaps a day but what if your operation relies on custom designed CNC machines and the entire system conks out? Then what? It could be a week before you’re back to full capacity. How do you plan to recover from five days of downtime?

The key to planning for the worst is to imagine the worst and then strategically prepare for it. When it comes to each risk, you need to determine if that risk can be eliminated or its effect reduced. Sometimes we need to accept that certain risks can’t be avoided. In that case, a good workaround might be to lessen its impact by transferring the risk onto the correct insurance product. That way, if your custom designed production line dies, your insurance could help bridge the gap until you’re back up and running.

All of this points to why it’s so important to develop a solid relationship with your insurance broker. Both you and your broker need to grab shovels and start digging for holes. Your broker needs to fully understand how your business operates and the threats it faces and what those impacts would be. Only then can he or she custom design the right insurance program for your company.

Each business is unique and one plan will never fit all but the strategic planning process remains the same. Imagine the worst case scenario and then create a counterbalance to it. You’ll sleep better at night.