Small Business Management Chapter 17

Insurance

A contract between two or more parties in which one party agrees, for a fee, to assume the risk of another.

Co-Insurance

A contract stipulation that requires a policyholder to carry insurance in an amount equal to a stated minimum percentage of the market value of the property insured.

Internal Control

A set of rules and procedures that work to limit the opportunity for employee theft or malfeasance.

Separation of Duties

A type of internal control that separates the physical control of an asset from the person accounting for that asset.

Joint Venture

An agreement between two or more entities to pool resources in order to complete a project.

Surety Bonds

An agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements.

Deductible

An amount of loss that will not be paid by an insurance company.

Fidelity Bonds

Bonds that repay employers for losses caused by dishonest or negligent employees. (Dishonesty Bonds)

Intellectual Property Rights

Comprise the legal rights to use unique features of products or services that provide a competitive advantage.

Coverages

Contractual provisions of insurance policies that specify what risks the insurance company is assuming.

Key Employees

Employees whose experience and skills are critical to the success of a business. Acute Risk.

Internal Audit

Evaluation of business risk. Evaluation of risk control structure. Systematic analysis of business processes and controls. Information on irregularities.

Risk of Nonpayment

Experienced by all businesses that offer credit.

Buyout Insurance

INsurance that provides money to owners of a business to buy the shares of any deceased owner from that owner's heirs.

Managing Risk from Violations of Tax Regulations

Keep complete, accurate accounting records Establish a relationship with accountant and lawyer expert in tax issues. Make paying taxes a first financial priority.

Regulation of the Workplace

Laws and governmental rules that limit the freedom of business owners to manage their businesses as they please.

Tax Codes

Laws and regulation that specify the requirements of taxation. Include franchise or corporation taxes, income taxes, employee taxes, sales and use taxes, and property taxes.

Employee Theft

Misappropriation of business property by employees of that business.

Product Liability

Payment for injury or damage that occurs during the use of the business's products.

Key Person

Protects you in the event that a key employee dies or is disabled and cannot work

Protected Classes

States of being that are expressly prohibited from suffering discrimination: race, color, religion, sex, national origin, gender, age, or disability.

Insurable Value

The amount of an asset for which a company will write an insurance policy.

Business Risk

The level of probability that the future economic state of the business will be worse than expected.

Managing Risk of Employee Violation of Government Regulations

Written policy Training Act upon receipt of any complaint.