Common Risk Exposures for Retail Stores

By Michael Murphy

clothes in hangers on a rack

Owning and operating a retail store can be a fulfilling experience. Years of hard work, risk-taking and financial investments have allowed you to turn your dreams of opening a store of your own into a reality. But is your business protected against the unexpected? Regardless of the specific type of store you manage, your retail business is likely exposed to a variety of risks. Knowing which ones apply to you will help you ensure your business is fully protected.

Here are some of the most common retail industry risks that may apply to your business:

Retail Risk Management Factors

Property damage: Damage to your property, including your building, signage, merchandise, and equipment, can significantly impact your business’s operations and chance of survival. No matter how careful you are in maintaining your property, you can’t always avoid things like natural disasters and vandalism.

Equipment breakdown: You need functioning equipment to service your customers and maintain operations—from computers and point-of-sale systems to HVAC, electrical and mechanical systems. A malfunction or breakdown in any one piece of equipment will impact your operations, potentially even leading to a prolonged closure.

Crime: Retail stores are particularly vulnerable to criminal activity—from simple shoplifting to robberies, online scams, and various types of fraud (e.g., money fraud, return fraud and checkout fraud).

Premises: The high volume of people entering and exiting your retail store on a daily basis put you at a greater risk of liability from accidents related to slips, trips, falls, equipment and unauthorized access to your building. Something as simple as a wet floor or an uneven surface can lead to costly insurance claims following an incident.

Workers’ compensation: Any time one of your employees is injured on the job—anything from slips, trips and falls to musculoskeletal injuries, sprains and strains caused by repetitive tasks—you could be looking at expensive workers’ compensation claims. Even normal everyday tasks related to stocking shelves, unloading product and climbing ladders can all lead to accidents at a significant cost to your business.

Product liability: Though you strive to give your customers safe and reliable products, there may come a time when one fails to meet expectations—or worse, causes harm. Should the latter occur, you could be looking at a costly lawsuit that could easily soar into the six figures.

Business interruptions: Continuity is critical in business; you need steady revenue and cash flow to survive. If anything happens to interrupt your business continuity—from natural disasters, product recalls and cyber events to staff shortages or even supplier issues—your business will take a financial hit.

Cybercrime: Because retailers tend to process a high volume of credit and debit card information, they are a common target for cybercriminals. Even something as innocent as an improperly trained employee could put your business at risk of damaging ransomware attacks, viruses, phishing scams and malware. Though you may have the most robust risk management practices in place to reduce certain exposures, no system is 100 percent effective in ensuring an incident-free workplace. At Hanson and Ryan, we’ll work with you to assess your specific exposures and identify the best coverage at the most competitive cost to protect your business for the long-haul.

Retail Risk Management and Insurance Agents in NJ

For more information about insuring your retail business, contact one of our insurance experts.