Good practice is the best method of keeping losses from occurring. Insurance is made to work in harmony with good behaviors. Having best practices results in best premiums, and D&O Insurance is a must for every commercial insured, private or not.
For private companies, they see themselves as resilient to claims, therefore, it is difficult for many of them to consider what kinds of best practices to implement. If they can see no foul, they can see no harm to fix.
Consider these 3 “best practices” to implement in your private business, as shared in the survey:
Broaden the Perspective
When setting up crucial operational structures for a private company, outside experts of all kinds should be hired to assist.
Formalize Operations Structures
Critical areas of operation should be formalized, such as accounting practices, areas requiring legal care or compliance, risk management practices, and employment practices, including hiring and vacation policies, bonus structures, and determining compensation levels. Also, a company code of ethics and mission statement should be created with the understanding that they could prove legally significant, since written documentation of all kinds can counter erroneous claims by providing published proof.
Diversify the Board Membership
To avoid a myopic orientation, especially when a company is poised to grow, board members who are experts in the field should be hired, rather than those with a company association who will inevitably limit, rather than diversify or broaden, the perspective.
Remember, we keep losses reduced in a proactive approach to all aspects of our business.