SME Risk Management

The COVID-19 Pandemic has exposed the biggest vulnerability of Small Businesses – Inefficient Risk Planning, Management and Aversion. Large corporates with efficient Risk Management Metrics have only taken advantage of this situation by eating into the market shares of smaller companies. While some risks can not be completely averted, a number of Risks a business is exposed to can be Transferred or Insured.

While RISK MITIGATION is important, at times the COST OF INSURANCE is so high, the COSTS of Insurance far outweigh the Benefits that may be availed. At CAPSTONE, we first analyse the risks your Business is exposed to. We then undertake a detailed COST- BENEFIT Analysis, thereby segregating risks that should be Insured and those that should not be mitigated.

On successfully understanding Insurable Risk, we then try minimizing the Cost of Insurance by structuring mutually beneficial facilities for the Insurers and the SMEs.

While cost is important, the most crucial factor in Risk Mitigation is ensuring SUCCESSFUL CLAIM SETTLEMENTS. With our tie ups with all leading Industry Insurers and Risk Management Enterprises, we make sure to make the process of claim settlement a seamless and hassle free one.

Some Successful Risk Transfer Assistances we have undertaken for our clients:

KeyMan Risk Transfer: Most SMEs in India are closely held, managed and operated by One or more Directors. This poses a significant threat to the longetivity of the Enterprise if the Life of the Keyman is endangered. Also, most SME business owners have pledged most of their properties for raising funds for the business, hence not only is the business at risk, but also all the savings of the promoters. We successfully structured the following assistances for reducing and mitigating this risk:

  • Insurance covers based on total risk exposures of the Enterprise including Secured & Unsecured Debts and Creditors
  • Insurance at lower costs with higher coverage periods of up to 100years
  • Creation of Trusts around the funding – so any claims received can not be touched by general creditors lenders of courts of law depending upon the rules of the law from time to time.
  • Lower premiums achieved by multiple insurer comparisons.

The KeyMan Cover is structured in a way where at the occurrence of the event, the successors have the choice to either reduce the debt and continue the enterprise, or sell the enterprise altogether all this while ensuring all collaterals offered can be freed from any charge or encumbrance.

Stock and Infrastructure Cover

A major part of the Capital of an enterprise is held in the form of Inventory and investments in Fixed Assets, Plant and Machinery. We create a holistic insurance cover to ensure that in case of any unfortunate event that triggers the loss of these assets, the risk of capital loss is mitigated by shifting the burden onto the insurer. This is done on fair and complete value basis by working with our Insurance partners ensuring that such events do not bring the functioning of the business to a standstill.

While the focus here is also to insure on a lowest cost basis, claim settlement is given top priority and our partners work with the enterprise to ensure complete and authentic documentation, surveys and claim settlements.

Receivable Insurance:

While Receivable Insurance is a relatively new concept in India, at Capstone we are partnered with Multiple Debtor insurance providers. We undertake a financial analysis of your customers, provide you with their Financial Health Reports and accordingly insure clients where the company has a higher exposure towards defaults.

We undertake Receivables cover on Domestic as well as Export customers, ensuring complete settlement of accepted outstandings in any case of buyer bankruptcies and insolvencies.