The devastating hurricanes in Florida in 2004 and in the Gulf region in 2005 certainly highlighted the critical importance of disaster risk management. And it is important to note that disaster risk management is not just about maintaining a comprehensive insurance plan. Here are some tips on mitigating the various disaster risks for asphalt contractors:
- Hazard and contents risk: Make sure you are adequately insured against fire and theft. Keep good records of the value of your assets in case you ever must make a claim. Also, this will ensure that you do not over-insure or under-insure the value of your assets.
- Other insurable risks: Additionally, you need other insurance such as Liability Insurance, Business Interruption Insurance and Workers' Compensation Insurance. A good insurance agent should be able to assist you in purchasing the right types and amounts of coverage.
- Natural disaster risk: If your business is located in a flood zone, flood insurance should be purchased, and your inventory and other assets should be stored above potential flooding areas in the building. If you are located in an area that is prone to earthquakes (see Northern California), your building construction and equipment installation should be done to mitigate this risk.
- A contingency plan: You need a contingency plan to help you through any disasters that might strike. The contingency plan would include alternative sites for your shop, an evacuation plan, fire prevention training for employees, storage of backed up computer data off site or in a fireproof safe or vault, and key contacts in the event of a disaster.
With all of the corporate governance issues that have taken center stage following the scandals brought on by Enron, Arthur Anderson and others, publicly traded companies have experienced a full dose of regulatory risk in recent years. But public companies are not the only ones that must manage regulatory risk.
Alice Magos writes the online column, "Ask Alice," for the CCH Business Owner's Toolkit (www.toolkit.com), providing advice on a variety of subjects involved in running a business. "The minute you become an employer, you become subject to a host of federal labor laws, not to mention OSHA regulations and an assortment of other federal agency rules," explains Magos.
For example, all employers must comply with federal laws such as FLSA, FICA, FUTA, ERISA and the Equal Pay Act. And depending on your number of employees, you may have to comply with laws such as COBRA (20 or more employees) and the Family Medical Leave Act (50). These laws mean complying with requirements for important things like payroll withholdings, overtime pay and the display of posters for EEOC, the Federal Minimum Wage Notice and others. The penalty for non-compliance with these regulations can be stiff fines or even jail.
The bottom line with regulatory risk is to stay informed. Keep up with industry specific and general regulatory issues and by staying in touch with your CPA and attorney.
The laws that govern commerce in the United States are vast and complex and create a certain level of legal risk for all businesses, regardless of size or industry. Many of these legal risks can be mitigated, but Magos advises that the best method for mitigation is to choose one's associates wisely.
"Check out everyone you do business with; employees, vendors, suppliers, customers, advisors and investors," advises Magos. "Dealing with honest and non-litigious folk is a good beginning."
In addition to dealing with the right people, Magos offers the following practical ways to mitigate legal risk: