What if I were to tell you that you can avoid risks and growth disruptions before even launching your marketplace? Or, that you can save yourself hundreds of thousands, or even millions, of dollars before onboarding your first customer? Well, you can.
At Marketplace Risk, we approach risk management with a layered, top-to-bottom approach. We encourage startup founders to factor risk management into the product, at the outset. The reasoning is simple: by building your product with risk in mind, you are able to build the strongest possible defense against inevitable risks to your platform. If you are successful and scale your product, you will inevitably experience those pesky risks.
So why not prepare for your successful future and consider risk management at the outset?
In this blog, we will outline the four layers of our approach and why each of them plays an important role in the mitigation of risk to your marketplace. Keep in mind, this isn’t intended to be exhaustive, rather, it’s supposed to get you thinking about risk and appreciating the value of risk management.
Often overlooked, executives are responsible for thinking of risks affecting the company at the highest level, including the corporate entity, its shareholders and directors. While this may seem like a “no brainer” to most, the very act of incorporating risk management at the top potentially shields these stakeholders from unnecessary liability. Practically speaking, executives should be conscious of insurance programs that effectively transfer risks, including Directors & Officers coverage, and make sure that the business is insured for the service actually provided. In other words, you want to be insured for the actual risks attendant to your business.
The best way to do this is to interview your insurance brokers to ensure they understand your business and the risks associated with it. Make sure they understand marketplaces! It also means that you should familiarize yourself with the underwriting process and understand your broker’s submission to the insurance markets. Beyond this, it’s important to observe proper corporate governance as it relates to the board, and ensure that you adhere to the obligations in the financing documents if you’ve got investors. It is also incumbent upon executives to implement standard document requirements, including non-disclosure agreements, independent contractor agreements, employment agreements and employee handbooks and policies.
Business Model & Product Design
In terms of the CDA Section 230 defense, your marketplace should operate as a passive venue such that the marketplace is not authoring content. In a perfect world, and according to current jurisprudence, that should provide you protection from online and offline behavior of customers. There’s a lot to this, so make sure you consult a lawyer or someone extremely familiar with the CDA. This is something that can easily be integrated and accounted for...and it provides great protection.
Technology Tools & Resources
We are living in the age of technology. The myriad of tools and resources to protect your marketplace and its users are plentiful. Just look at what’s available to identify, predict and prevent nefarious individuals and incidents. From identity products, to screening tools, to fraud prevention strategies, it’s all out there! Beyond that, there is so much data available to combine with any number of tools to really drill down on the bad actors. The question becomes whether you build or you buy.
Depending on resources, technological sophistication and roadmaps, this question can be harder to answer than one would think. Just know that there is a lot that you can do to keep your platform and your users safe...you just need to explore them.