Ryno de Kock, Head of Distribution at PSG Insure, unpacks the top five risks to cover your business against from the start

An estimated 385,000 new companies were registered in South Africa last year, a testament to the country’s strong entrepreneurial drive and appetite for innovation. Yet the stark reality is that up to 80% of these businesses will fail within their first five years[SK1] .

Ryno de Kock, Head of Distribution at PSG Insure, says this disconnect highlights a critical vulnerability in the early-stage business landscape. “South Africa continues to see a steady pipeline of new businesses entering the market, but many operate in a high-risk environment without sufficient protection.”

While access to finance, market conditions and operational challenges all contribute to business failure, inadequate risk protection remains an often-overlooked factor.

In South Africa, fewer than one in five SMEs have formal business insurance, leaving them exposed to the very events most likely to derail their growth. “In many cases, failure is not due to a lack of ambition or opportunity, but rather an inability to absorb unexpected shocks that disrupt operations and cash flow,” says de Kock.

While risk exposure varies by industry, he points to five core areas that every business should address from the start:

1.     Asset loss and damage

Commercial property insurance typically protects against risks such as fire, theft and natural disasters, which remain among the most common causes of loss. For businesses operating from leased premises, it is important to note that while landlords typically insure the building structure, tenants are responsible for insuring their contents, including equipment and stock.

2.     Business interruption

Unexpected disruptions can halt operations entirely, leading to loss of income and increased operating costs. Business interruption insurance is designed to cover lost revenue and additional expenses while a business recovers, helping to maintain financial stability during periods of downtime. “It’s often not the damage itself, but the inability to trade that puts businesses under pressure,” notes de Kock.

3.     Liability risk

Third-party claims resulting from injury, property damage or alleged negligence can have severe financial and reputational consequences. Liability cover – including public liability and, where relevant, professional indemnity – helps protect businesses against these claims and associated legal costs.

4.     Cyber and data risk

As more businesses adopt digital platforms, exposure to cyber threats continues to grow. Cyber insurance provides protection against incidents such as data breaches, ransomware attacks and fraud, which can compromise both business operations and client trust. “Cyber risk is no longer limited to large corporates – small businesses are increasingly being targeted,” says de Kock.

In addition to insurance, proactive measures such as regular software updates, multi-factor authentication and employee awareness training can significantly reduce exposure to cyber incidents.

5.     Internal risks and people-related exposures

Employees are central to business operations, but they also introduce risk. Depending on the nature of the business, this may include protection against internal fraud through fidelity cover, as well as professional liability insurance for businesses that provide advice or specialised services.

De Kock emphasises that insurance should form part of a broader risk management strategy. “Cover alone is not enough; businesses also need to take practical steps to mitigate risk, whether that’s investing in security systems, strengthening internal controls or putting contingency plans in place.”

Navigating commercial insurance can be complex, particularly for businesses in their early stages. Working with a qualified adviser from the outset can help ensure that cover is appropriately structured and aligned to the business’s specific risks.

“An adviser can play a critical role in identifying gaps, explaining policy terms and ensuring that businesses are adequately protected as they grow,” says de Kock. “This reduces the likelihood of underinsurance and helps avoid unexpected shortfalls at the point of claim,” he concludes.