Most people are familiar with Newton’s third law; that for every action there is an equal and opposite reaction. These same forces also apply in the world of technology. Innovation within a sector that enables faster, better, stronger and cheaper products and services can have a knock-on effect, creating new risks in other unrelated industries.
Drones are one such example. Australia entered the Drone Age in 2002 and was the first country to introduce legislation covering unmanned aerial vehicles. This paved the way for an explosion in the use of commercial drones for a wide range of sectors from film to construction, agriculture and mining. But with new rewards came new risks and responsibilities. Trespassing, the possibility of collisions with people, damage to buildings, property and other aircraft, personal injury and death in extreme cases all pose new risks to businesses operating the drones and other businesses who may be impacted by drone operations.
Small businesses operating in sectors such as film, construction and agriculture using drones will need to ensure that their insurance covers risks to their own business, employees, customers, property as well as ensuring they have the necessary insurance should their drone take an ill-fated flight and cause damage to an individual or another business.
Drones are one example, however the acceleration of innovation could pose countless other risks to all businesses, but disproportionately to SMEs. Driverless cars are just around the corner but have the same potential to be a liability minefield; and the use of robots also has potential to create a new type of risk for SMEs. The robot that has the ability to take orders from customers or collect goods from the warehouse also has the potential to cause accidents and injury. Even the use of data can pose risks to small businesses if, for example, your customer data gets into the wrong hands.
SMEs at the cutting edge of technology development will benefit from the idea of open innovation where different views and perspectives from other industries are incorporated in the concept development stage in order to reduce their impact on others. The more people engaged from a range of sectors, the better everyone will understand risk and the way that it can be managed in order to reduce the impact on SMEs.
It is difficult to anticipate and plan for risks outside the core sector in which a business operates, but having the right protection and insurance is crucial to mitigate damage that a business may unknowingly cause or be affected themselves.
Nigel Thomas, Divisional Chief Executive – Austbrokers Network, AUB Group