In the textile industry, companies can face many risks with business operations, finances, and legal aspects of the business. In a variety of ways, risks can be avoided through proper management and proactive plans to adjust inefficiencies and correct errors before large losses occur. Some risks fall within areas of textile industry liability coverage while others must be managed with business practices.
Business Operational Risks
There are a plethora of operational risks facing textile companies. Market risks include areas of supply and demand, competition, availability of raw materials, and fluctuations of commercial costs. Logistics and technology can pose risks to the business if a transport company is unreliable or the business doesn’t make updates to keep up with technological advancement. Even the political environment can cause problems if policies get in the way of current practices and strategies. Financial risks include the potential for liquidity problems, financial reporting and fraud, and issues with credit or foreign exchanges.
Risks that may not be closely related to the business operations side of a company include legal risks, human resources risks, and system risks. These are some of the risks that most often result in insurance involvement. For example, if data is compromised or there is a worker’s compensation claim, the company’s liability coverage should provide protection from any major losses.