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Planning for risk is critical to building value in any business.

By: Peter J. Strauss

Our company is headquartered in hurricane country and each hurricane season brings us a potential emergency, evacuation, and business interruption. While the risks are statistically remote, a direct hit could be devastating.

A captive insurance company can provide significant benefits through risk management and planning and can be a safety net for your business when that remote but costly event does occur. Captive insurance coverages can be tailored to the risks of your business including policies relating to cyber, business interruption, and property damage.

Using thoughtful analysis of your business operations and its risk — both large and small, routine and remote — an experienced captive manager can construct a risk management plan that covers risks that could disrupt your business operations. These coverages are often either unavailable or too costly in the commercial insurance markets. But, with a captive, you can cover the risks in your own insurance company and be confident that you have protection in the event of a business disruption event.

By using insurance expertise in the captive management industry, business owners can move away from the worries of “self-insuring” remote risks. With self-insurance, the entrepreneur is essentially gambling that she will have the funds on hand to cover the loss should a major event disrupts her business. Self-insurance is a big gamble that forces business leaders to bet that their organization, based on the current market conditions, will be able to have or maintain sufficient liquidity to weather potential damages to their operations.

Establishing a captive with the right coverages for the business over the long-term is a robust risk planning and mitigation tool for any business owner. And, when potentially disruptive contingencies arise, insurance is available to maintain the forward momentum of the enterprise.