Could a death in your company kill your business?

October 04, 2019
Taryn Lee-Johnston

People are a company’s most important asset.  It may be one of the greatest cliches in the business world, but it is also true.  The main reason for this is that people can’t simply be replaced the way many business assets can.  You can’t just swap out a person the way you can swap out a computer, but you can acknowledge the fact that staff are inevitably going to depart the company and sometimes it will happen at very short notice (and possibly in very painful circumstances) and that you should, therefore, be prepared for this.

 You can’t prevent all the bad things in life, but you can insure against their consequences

If a key member of staff departs the company unexpectedly you will need to look at managing their workload and, ultimately, replacing their expertise, ideally as soon as you possibly can.  Key Person insurance can give you the funds you need to move on with this process.

If that key member of staff is a shareholder and they die, then their shares will become part of their estate, which means that the beneficiaries of their will can dispose of them as they see fit.  Shareholder Protection Insurance can make it possible for the company to buy back the shares and prevent control, or at least influence, from falling into unwelcome hands.

In addition to these two forms of insurance, businesses may also want to look at Business Loan Protection.

It may be helpful to insure general staff, visitors and members of the public as well

While the previous comments related to key members of staff such as senior technical staff, senior managers and directors, it’s advisable to think about insuring against any mishaps happening to any of your staff, anyone who visits your premises (including any premises you use temporarily, such as pop-up stores) and basically anyone who interacts with your company in any way, including electronically.

By this point in time, all businesses should be well aware both of their responsibilities under GDPR and of the importance of cybersecurity.  To this might be added the fact that no business should ever consider itself too large or too small to be a target for cybercriminals or the fact that falling victim to such an attack can have devastating consequences.  With this in mind, today’s businesses may want to think about taking out insurance against cyberattacks.

Remember that insurance is a concept as well as a product

The best way to protect yourself against the consequences of negative events is to stop them from happening in the first place.  Now, obviously, this is not always possible, for example, death and illness are just a reality of life, although accidents and injuries may be preventable.  It may, however, still be possible to find ways to mitigate against at least the worst of their consequences.

For example, companies could protect themselves against loss of access to their main premises by keeping the data in their IT systems backed up offsite and having a system whereby employees can connect to company systems from remote locations.  Obviously this would not necessarily mean that everyone could keep working uninterrupted, but it could potentially facilitate some degree of business continuity.

Carrying this concept over to people, the business should typically do everything they can to ensure that as much relevant knowledge as possible is documented so it can be accessed even if the person is not available.  In this context “relevant information” can be anything from product knowledge to telephone numbers.  Basically, if it’s important to the running of the business, it should probably be documented in some way.

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