What Is Risk Management for Small Business? | Insureon

A risk is something that affects a small business’s ability to operate profitably. If risks are severe enough, the business could be forced to close.

Risks typically fall into two categories: pure risks and speculative risks.

Pure risks are incidents a business has no way of controlling. Fires, vandalism, or the death of key employees are all considered pure risks.

Speculative risks are the positive or negative outcomes of management decisions. Expanding a business into a new region or launching a new product are examples of speculative risk.

When small business owners and their insurance providers discuss risk management, they are usually referring to pure risks. Speculative risks are more frequently the concern of the business owner or leadership team.