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Mário Vinhas Deputy Executive Director | MDS Portugal
30.10.2018

Risk Management for Start-Ups

Whenever an investor buys stock, a surgeon performs surgery, an engineer builds a bridge, an astronaut explores space, a politician runs for office or an entrepreneur starts a business, risk is there, at every turn. Like an inevitable partner, always at your side. So risk management is an absolutely central concern to society. 

It contributes massively to economic growth, to improving standards of living and technological development. Without risk management, we would surely not enjoy the kind of world we do today.

However, in the world of start-ups, people still mistakenly assume that their companies don't have the same needs or face the same risks that larger companies do, simply because their small venture is just starting out. 

Risk management truly affects all sorts of businesses, at all levels, whatever the size, location or degree of complexity. And it does so regardless of economic or social juncture and contemporary policies.

So it needs to be conducted, planned and calibrated according to the company's traits and variables. Never, ever, must it be set aside or not factor into the company's management processes.

A start-up, by definition, is just starting out. It faces a number of risks that demand the construction and implementation of a risk management system, one preferably built into the processes of inception and investment. Hence the need to identify pertinent risk, to define and implement measures for adaptation and mitigation and to decide on, and prepare for, a number of ways to transfer, follow up on, and monitor risk. 

Companies and markets are dynamic. The initial risk set could change over time and different kinds of risk could arise later, which would demand renewed attention and adaptation, running the company through the same processes again.

In any risk management strategy, insurance plays a key role, both adequate and necessary to transferring more common kinds of risk. With a start-up, these are associated with reputation, professional liability or cyber attacks, in addition to more traditional risk, which must be covered by mandatory insurance policies, like workers' compensation, auto and fires.

The Portuguese market, however, doesn't always demonstrate an appetite for more complex kinds of insurance, as the current understanding is that premiums are too small vis-à-vis exposure and the accumulation of guaranteed risk.

Faced with the issue, and considering the need to find and develop the best solutions for start-ups, relevant as they are, MDS, as a broker and insurance & risk consultancy, brings to the table a wealth of experience and an expert team that works with entrepreneurs to define and implement risk management systems that will best fit your profile and the needs we have identified with you. 

MDS has privileged access to national and international markets, which allows it to provide any company, and start-ups no less, with insurance solutions that best guarantee correct transfer of insurable risk.

While it is evident that company owners should concern themselves with risk management, for they are the ones with capital and assets at risk, and sometimes even their own companies, it is also true that many companies and entrepreneurs have no risk management system in place. Nor is such a system one of their priorities. 

This is a grave and serious concern that MDS would like to help address, by regularly and actively advocating for awareness and support in identifying this need and for relevant behavioural changes.



Published in Aspectos Magazine.

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