Protecting the most valuable asset of your organisation, the people
Business isn’t just about generating income – it’s about the identification, quantification and management downwards of major risk.
Businesses that do not attend to that latter objective, may fail if luck turns against them. That is why some form of business risk reduction could be extremely useful.
Let’s consider just one illustration, that of your exposure to a critical individual.
Basic good business management practices dictate that an enterprise should never be entirely dependent on a single person or even several individuals. Things such as succession planning exist to try and ensure that if something happens to an individual, somebody should be ready and waiting to step immediately into their shoes, fully equipped with all the appropriate skills and expertise.
Unfortunately, having such contingencies in place may prove to be very expensive, particularly for small to medium sized enterprises. Another problem with the above theory is that it isn’t always a question of skills and knowledge. Sometimes it might be one of capital, if the person concerned is a director about to make a major capital investment into the organisation.
Nobody is pretending that an insurance policy alone can cover all of the risks and issues associated with the death or serious illness of a critical individual or company. However, many of them may be able to be ameliorated by having available sums of money that can be used to do things such as:
- replace lost capital,
- hire in temporary expertise to cover the gaps,
- engage in rapid and expensive recruitment in order to try and find a permanent replacement for the person involved.
A policy of that type, typically described as keyman cover, can make a lump-sum payment to the affected organisation or policyholder should a critically important individual suddenly become unavailable to the organisation.
Although this may sound something of a large corporate solution, that’s actually not the case. As stated above, it might well be smaller to medium sized organisations that have the greatest exposure to this type of risk.
Comparatively few companies would consider operating without various forms of cover against things such as risks to their premises, equipment, stock and goods. Yet it is a generally accepted wisdom that the people in an organisation are or should be its greatest asset.
It might therefore be rather strange to cover some of the above mentioned things without taking into account the risks and exposures that arise from our colleagues.
Having this type of cover in place might also be important in terms of reassuring investors in the organisation.
Sometimes banks and stockholders might expect to see this type of policy being put in place as a component of standard best-practice corporate governance.
So, if you haven’t already done so, it might well be worth thinking about this issue and what you can do about it.
Drewburry Insurance offers business health insurance to protect the health of your staff