LEGAL AND RISK ANALYSIS

1. LEGAL AND RISK ANALYSIS

2. IMPORTANCE OF RISK ANALYSIS • Risk is an inherent component of your operation • You need to protect your business and your assets • Identifying and evaluating your risk allows you to REDUCE your risk by planning ahead • Allows you to determine the risk you can cover and the risk you need to insure

3. On-Premise Fire Injury Product Natural Liability Disasters Property Customer Risks Risks Burglary and Bad Debts Business Swindles Personnel Risks Shoplifting Employee Dishonesty Competition Loss of from Key Bankruptcy Former Executives Employees THE SOURCES OF RISK “The Wheel of Misfortune”

4. Licenses and Permits • Many businesses and occupations require licenses and/or permits • You should be prepared to complete these requirements in order to operate

5. Employee Theft • Nearly 1/3 of all employees commit some degree of employee theft (Department of Justice) • Employee theft costs businesses $40 billion dollars each year. This total is ten times the value of street crime losses annually in the USA. (Chamber of Commerce) • Some experts have found that one-third of all new businesses fail because of employee theft. • Employee theft can include: faking on-the-job injuries for compensation, taking merchandise, stealing small sums of cash, forging or destroying receipts, shipping and billing scams, putting fictitious employees on payroll, and falsifying expense records. Criminal Law Lawyer Source: http://www.criminal-law-lawyer-source.com/terms/employee-theft.html

6. Facts on Shoplifting • Shoplifting is North America's # 1 property crime • Shoplifting has doubled since 2000 • 1 in 10 people is a shoplifter • In 2000 shoplifters stole an average of $152.00 per incident today it is more than $200.00 per incident • Shoplifters are caught only 1 in 50 times • A typical retail business will suffer losses of between 1% - 8% of total gross sales due to retail shrinkage • More than 50% of employees will look the other way while a shoplifting incident is in progress • Fred Tarasoff, Loss Prevention Specialist http://www.evancarmichael.com/Retail/3869/Retail-Loss-Growing-Problem.html

7. Shoplifting • Cost Estimates • Typical grocery store has 1% profit margin • To cover cost of $2 stolen item the store must sell $200 worth of items • Average clothing store has 48% profit margin • To cover cost of average theft of $200 the store must sell $417

8. Costs are often passed on consumers • Estimated that average consumer in U.S. pays $250 per year extra to cover costs of shoplifted items from retailers

9. REDUCING YOUR RISK • Think through each risk • Create a strategy to avoid/prevent/reduce/transfer the risk • Avoid: Not engaging in hazardous activity • Prevent: Stopping losses • Reduce: Lessening impact of loss • Transfer: Paying someone else to take risk • Decide on need for insurance coverage

10. Types of Insurance • Worker’s Compensation • General Liability – accidents and injuries • Auto Insurance • Property/Casualty • Umbrella Coverage • Business Interruption • Life and/or Disability • Business Owner’s Policy

11. Choosing an insurance agent • Recommendations • Ask if there is a loss-control service • Check the size of an agency • Check how long agent has been in business • Check licensing • State of Wisconsin – Office of Insurance Commissioner

12. Check rating of company Registration • A.M. Best Company:www.ambest.com • Standard & Poors:ww2.standardandpoors.com. Free • The Street.com:TheStreet.com (Money, Insurer Safety Ratings)

13. Additional Help • Consumer’s Guide to Insurance for Small Business Owners • Hartford insurance analysis