Businesses reveal they fear professional mistakes
Nearly three quarters of small business owners fear making professional mistakes but are unprepared about the threat of compensation claims, new research suggests.
AXA Business Insurance said that 74% of small business had concerns about making errors, such as giving bad advice to clients.
Nearly half of businesses held fears of doing so, while 24% had concerns that the client may file a compensation claim against them as a result.
Despite this, most businesses are unprepared to deal with a confrontation regarding the quality of their service, should such a situation arise.
Nearly a fifth said they did not fully understand the laws related to their area of work while research from Datamonitor in 2014 suggested 22% of firms who give professional advice lacked indemnity cover.
This means they are not protected against legal fees or compensation clams if a client makes allegations against them of giving bad guidance.
While firms are likely to give some bad advice at some point due to the nature of the working environment, actions can still be taken to minimise risk.
This can include taking measures to protect themselves in the worst instances, ultimately safeguarding the company to some extent.
Businesses also stand to benefit in the long term if they understand the consequences of their errors and are prepared to admit to them – enabling a continuous learning curve of development.
Without protection against claims and other allegations, businesses could find themselves in financial difficulty, especially if they lack the money to cover costs for example.
In the worst instances where claims are highly severe, the costs and associated punishments resulting from any action could leave a company requiring business rescue procedures.
These solutions may not always be available however, so it is important for firms to lower the risk as much as they can.
This should enable firms to act with confidence, but there is little room for complacency in the modern economy which places great pressure on bosses to make the right decisions.
By Phil Smith