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As always, in this blog post, we focus on risk management in insurance. This time we will discuss the potential risks that threaten the commercial business duo the high political tension in the coming election in Indonesia.
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The coming Indonesian general election in 2024 looms nationally as a highly anticipated event. Businesses face unique challenges—the risks associated with general elections.
While elections are often seen as a celebration of democracy, they can also unleash a wave of uncertainty and social unrest, presenting significant threats to commercial enterprises. In particular, the potential for riots, strikes, and property damage demands the attention of business owners and stakeholders and proactive measures.
In this article, we delve into the critical topic of election-related risks for businesses, focusing specifically on the preparation needed to mitigate the impact of riots, strikes, and property damage. By understanding the potential risks and developing effective strategies, businesses can safeguard their interests and ensure continuity amidst the turbulence of electoral processes.
Throughout history, elections have catalyzed social upheaval, with collective voices seeking change or expressing dissatisfaction with the status quo. This yearning for transformation can manifest in various forms, such as civil unrest, strikes, and vandalism.
If left unchecked, these actions can disrupt the ordinary course of business operations, creating an environment of fear and instability and ultimately hindering the legitimacy of the electoral outcomes.
Therefore, businesses must grasp the complexity surrounding election-related risks and adopt a proactive stance to safeguard their assets, employees, and reputation. By doing so, they contribute to a stable and conducive environment for democratic processes while protecting their bottom line.
In the following sections, we will explore the historical context of election-related risks in Indonesia, analyze key risk factors, and discuss potential strategies to address and minimize the risks associated with riots, strikes, and property damage during the general election.
Examining these crucial aspects aims to deepen understanding, identify challenges and opportunities, and foster a stronger and more resilient democratic process for the nation.
Join us as we embark on this journey, exploring the landscape of election-related risks for businesses and uncovering strategies to navigate these challenges successfully. Together, we can forge a path toward a secure and prosperous future, ensuring the continuity and growth of commercial enterprises amidst the dynamic context of the upcoming general elections in Indonesia.
WHAT ARE THE COMMERCIAL BUSINESSES?
Commercial businesses encompass a wide range of industries and sectors, each with its own unique characteristics and vulnerabilities. The risks associated with elections can affect companies of all sizes and locations, from small local shops to multinational corporations. Let’s explore commercial businesses’ definitions, types, and values of these risks.
Commercial businesses are profit-driven entities that buy and sell goods or services in the marketplace. They operate with the primary objective of generating revenue and maximizing profits.
Types of Commercial Businesses:
- Retail stores
These businesses include supermarkets, clothing boutiques, electronics shops, and other establishments that sell goods directly to consumers.
- Restaurants and cafes
These businesses provide food and beverages to customers for on-site consumption or takeout.
- Manufacturing companies
These businesses produce goods or components on a large scale, often involving machinery and specialized processes.
- Financial institutions
These include banks, credit unions, insurance companies, and other organizations that provide financial services to individuals and businesses.
- Professional services
This category encompasses law firms, consulting agencies, accounting firms, and advertising agencies offering specialized expertise and knowledge-based services.
- Hospitality industry
Hotels, resorts, and other accommodation establishments fall under this category, catering to travelers and providing lodging services.
- Online retailers
E-commerce businesses operate primarily through online platforms, selling a wide range of products to customers worldwide.
- Construction companies
These businesses are involved in the construction of buildings, infrastructure projects, and other related activities.
- Transportation and logistics
This category includes businesses engaged in shipping, logistics, freight forwarding, and transportation services.
It is important to note that regardless of their size or location, all commercial businesses face potential risks during elections, including the threat of riots, strikes, and property damage. In the upcoming sections, we will explore strategies to prepare and mitigate these risks effectively, ensuring the safety and continuity of businesses amidst the changing political landscape.
WHAT ARE THE ACCIDENTS THAT THREATENS THE COMMERCIAL PROPERTIES DUE TO RIOT AND STRIKE?
During riots, strikes, or malicious harm, commercial properties can be vulnerable to accidents and incidents resulting in loss or damage. Some of the common types of accidents that can occur include:
Acts of vandalism can involve graffiti, destruction of property, or defacement of buildings, resulting in physical damage and aesthetic deterioration of commercial properties.
Deliberate acts of setting fire to buildings or structures can lead to severe damage or complete destruction of commercial properties, causing significant financial losses.
- Looting and Burglary
In civil unrest, looting and burglary may occur, where individuals break into commercial properties to steal merchandise, equipment, or valuables. This can result in both property damage and financial loss.
- Property Destruction
Riots and strikes can escalate to the point where commercial properties become targets of violence and destruction. This may involve breaking windows, damaging doors, or demolishing structures, leading to extensive property damage.
Sometimes, individuals or groups may intentionally sabotage commercial properties by tampering with equipment, infrastructure, or systems. This can disrupt operations and cause substantial financial and operational losses.
- Accidental Damage
While not directly related to riots, strikes, or malicious harm, these events can create a chaotic environment that increases the risk of accidents. Accidental damage, such as collisions, fires, or structural failures, can occur during these turbulent situations and contribute to property loss.
Businesses must be aware of these potential risks and proactively protect their commercial properties. Implementing security measures, such as surveillance systems, alarm systems, reinforced doors and windows, and adequate insurance coverage, can help mitigate these accidents’ impact and safeguard commercial business assets and operations.
EXAMPLES OF POLITICAL RISKS ACCIDENTS IN INDONESIA
In Indonesia’s history, commercial properties experienced loss or damage during riots, strikes, or malicious harm. Here are a few examples:
- May 1998 Riots
Following the Asian Financial Crisis and political unrest, widespread riots erupted across Indonesia in May 1998.
The riots targeted businesses associated with Chinese-Indonesian owners, but many other commercial properties were also affected. Numerous shops, malls, and businesses were looted, vandalized, and set on fire.
The riots resulted in significant damage and financial losses to businesses, particularly in Jakarta and other major cities.
- 2019 Post-Election Protests
Following the announcement of the presidential election results 2019, protests and demonstrations took place in various parts of Indonesia. While most protests were peaceful, some incidents escalated into violence and property damage.
Commercial properties, including shops, offices, and vehicles, were targeted, resulting in property destruction and financial losses for businesses.
- Labor Strikes and Industrial Disputes
Strikes and labor disputes in various industries have occasionally led to property damage and business losses. In some instances, striking workers have resorted to sabotage, vandalism, and destruction of property as part of their protest actions. These incidents have affected commercial properties, factories, and infrastructure, causing financial setbacks and disruptions to operations.
While specific data on the extent of damage and financial losses in these incidents may vary, it is clear that riots, strikes, and malicious harm have had adverse effects on commercial properties in Indonesia. Businesses have incurred significant costs regarding property damage, inventory loss, interrupted operations, and decreased customer confidence.
To mitigate the impact of such incidents, businesses must be prepared with robust risk management strategies, including comprehensive insurance coverage, security measures, contingency plans, and engagement with relevant stakeholders. By proactively addressing these risks, businesses can minimize losses and ensure continuity during challenging times.
HOW CAN INSURANCE COVER THE RISKS OF RIOTS, STRIKES, AND MALICIOUS DAMAGE?
Insurance can be crucial in covering the risks of riots, strikes, and malicious damage to businesses. Here are some ways insurance can provide coverage in such situations:
- Property Insurance
Commercial property insurance typically covers physical damage to buildings, structures, and contents caused by riots, strikes, or malicious damage. This coverage can help businesses recover the costs of repairing or rebuilding damaged property, including fixtures, equipment, inventory, and furnishings.
- Business Interruption Insurance
Riots, strikes, or malicious damage can disrupt business operations, leading to financial losses. Business interruption insurance provides coverage for the loss of income and additional expenses incurred during the period of interruption. This coverage can help businesses cover ongoing expenses, such as rent, employee salaries, and utilities, even if they cannot operate temporarily due to the incidents.
- Contents and Inventory Insurance
Commercial insurance policies often include coverage for contents and inventory. In riots, strikes, or malicious damage, this coverage can compensate businesses for losing or damaging their stock, supplies, raw materials, and finished products.
Liability insurance can be valuable when businesses may be held responsible for damages or injuries resulting from the incidents. For example, if a riot damage neighboring properties or a strike leads to bodily harm, liability insurance can provide coverage for legal defense costs and potential settlements or judgments.
- Civil Unrest Coverage
Some insurance policies offer specific coverage for civil unrest, including riots and strikes. This coverage may include property damage, business interruption, and additional expenses related to the incidents.
It is essential for businesses to carefully review their insurance policies and consult with insurance providers to ensure they have adequate coverage for risks related to riots, strikes, and malicious damage. Each insurance policy may have specific terms, conditions, and exclusions, so understanding the coverage details and limits is essential.
In the event of an incident, businesses should promptly notify their insurance provider and document the damages and losses thoroughly. This will help streamline the claims process and ensure companies receive the appropriate compensation to recover and rebuild.
While insurance can provide financial protection, businesses should also take proactive measures to mitigate risks, such as implementing security systems, training staff for emergencies, and developing contingency plans. Combining insurance coverage with risk management strategies can help businesses better navigate and recover from the potential impacts of riots, strikes, and malicious damage.
Why do commercial business owners need to use insurance brokers?
Commercial business owners can benefit from using insurance brokers for several reasons:
- Expertise and Knowledge
Insurance brokers are professionals with extensive knowledge and expertise in the insurance industry. They understand the complexities of insurance policies, coverage options, and market trends. By working with an insurance broker, business owners can tap into this specialized knowledge and receive guidance on selecting the most appropriate insurance coverage for their needs.
- Tailored Solutions
Insurance brokers act as intermediaries between businesses and insurance providers. They assess each company’s unique risks and requirements and help identify insurance policies that best align with their needs. Insurance brokers have access to a wide range of insurance products from multiple insurers, allowing them to customize insurance solutions that address the particular risks commercial businesses face.
- Access to Multiple Insurance Providers
Insurance brokers work with various insurance companies and have access to multiple insurers. This access enables them to compare coverage options, premiums, and terms offered by different providers. By leveraging their network, insurance brokers can obtain competitive quotes and negotiate favorable terms on behalf of their clients, ensuring businesses have access to a broad range of insurance options.
- Time and Effort Savings
Navigating the insurance market can be time-consuming and complex. Insurance brokers can save business owners valuable time and effort by handling the insurance search, evaluation, and negotiation processes on their behalf. This allows business owners to focus on their core and other essential business operations.
- Claims Assistance and Advocacy
Insurance brokers can provide valuable assistance and advocate for their clients in the unfortunate event of a claim. They help facilitate claims, ensuring businesses receive fair and timely settlements. Insurance brokers have expertise in claims management and can guide and support businesses throughout the claims-handling process.
- Ongoing Support and Risk Management
Insurance brokers offer ongoing support to their clients, including policy reviews, risk assessments, and updates on industry trends. They can help businesses stay informed about changes in their risk profile and recommend adjustments to their insurance coverage as needed. Insurance brokers can also provide risk management advice, assisting companies to identify and mitigate potential risks through proactive measures.
By engaging an insurance broker, commercial business owners can benefit from their expertise, access to multiple insurance providers, personalized solutions, time savings, claims assistance, and ongoing support. Insurance brokers can be valuable partners in helping businesses navigate the complex world of insurance, ensuring they have the right coverage to protect their assets, operations, and financial well-being.
One of the leading insurance brokers that focuses on social risk is L&G Insurance Brokers.
For all your insurance needs, please get in touch with L&G Insurance Broker now!
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