As a business leader, you put in a lot of time and effort into planning. You plan for positive outcomes such as financial growth, new products, hiring new employees, and relocation to larger offices.
However, you must also plan for the negative, such as employee conflicts, economic downturns, and unexpected emergencies. Another negative scenario for which your company should plan is key person risk (sometimes known as key man risk).
As an executive health provider, we regularly assist companies with key person risk through executive physicals and executive health programmes. One of the primary reasons that many of Echelon Health’s corporate clients come to us is to manage key person risk.
So, what exactly is key person risk? How will you handle it?
Key Person Risk: A definition
Before you can define key person risk, you must first define (and identify) your key people. Key individuals are frequently:
- Executives in the C-Suite (chief executive officer, chief financial officer, etc.)
- Other employees in positions of leadership (vice president and director-level employees)
- Employees who have a skill set that is unique to the company
- Managing Partners and founders with an equity stake in the company
- Owners of customer relationships who are in charge of keeping key clients happy
- Rising stars who are making a name for themselves in the company
They must be considered a key person if your company cannot afford to lose them tomorrow. The risk to your business operations if one of these critical employees is absent for an extended period of time for any reason is known as key person risk.
It could be a months-long absence due to a serious health issue. It is possible that they will leave permanently because they were poached by one of your competitors. In any case, losing them will restrict or halt your operations and may have a negative impact on your company’s bottom line.
A key person risk strategy was an optional feature of business planning until February 2020. Something is on the minds of business leaders all over the world, but it appears to be too far away for widespread action.
COVID-19, like many other things, changed the definition of key person risk. Instead of being a distant, nice-to-have feature of business planning, it is now a topic that all businesses should think about.
Examples of Key Person Risks
The core of key person risk remains the same: can your company lose one of its top employees and continue to operate normally?
The manifestation of key person risk in your business operations can vary. It is about being ready for things like:
- Your CEO dies of a heart attack, leaving the company without a CEO for the first time.
- Your top salesperson has been in a serious car accident and will be unable to sell for several months.
- Another executive is diagnosed with cancer, putting them on leave for several months.
- A competitor makes a better offer to one of your top business development executives.
- An employee with a skill set that no one else in the company possesses decides to leave the company to try building something themselves.
If your company can relate to any of these scenarios, you should consider developing a key person risk management strategy.
2 Key Person Risk Management Strategies for Your Company
When you’ve decided that your company should focus on key person risk management, it’s time to get down to business. Three primary strategies can be used by your company to manage key person risk.
- The insurance plan: This entails safeguarding your business with insurance policies, such as a life insurance policy taken out on your top employees or a business disability insurance policy.
- Executive health benefits: This strategy addresses key person risk from two perspectives: assisting your top employees in improving and maintaining their health, lowering their risk of a serious health issue, and demonstrating how much they are valued, lowering the risk of them leaving for a competitor.
2 Ways Executive Health Programmes Can Assist in Key Person Risk Management
As previously stated, Echelon Health assists companies in managing key person risk through our executive health programmes.
And most of the time, we see executive health reducing a company’s key person risk in two main ways, both of which have been happening for years on a much smaller scale, but have been brought to light post the pandemic in 2020:
- Providing the most technologically advanced and individually tailored executive physicals.
- Offering a comprehensive executive health programme with concierge physician care available whenever needed.
How Echelon Health Can Assist You in Managing Key Personnel Risk
Our health should be considered a full-time job! We should take care of our health in a variety of ways on a daily basis to maintain our health. We have collaborated with many companies to do just that; to help them reduce key person risk with a dedicated service that looks at each individual person and their health and establish ways in which they can maintain it and improve it.
Some businesses rely on our executive physical programme to assess the health of their top personnel on a regular basis and detect risk factors before symptoms appear. These preventive health assessments can be personally tailored to the needs of your company or be one of the options that we provide from our curated assessments. For example, our flagship Platinum Health Assessment allows us to detect up to 92% and 95% of preventable causes of death among men and women respectively. The following are all included in the package:
- Medical Questionnaire & Pre-Assessment
- Blood Tests
- CT Aorta
- CT Heart
- CT Coronary Angiogram
- CT Chest
- CT Pelvis
- CT Virtual Colonoscopy
- CT Bone Density
- CT Upright Skeleton
- MRI Brain
- MRI Cerebral Artery Angiogram
- MRI Carotid Artery Angiogram
- MRI Prostate
- Ultrasound Thyroid
- Ultrasound Testes/ Ovaries
- Digital Mammogram
- Full Body Mole Screen
- Final Consultation
Others take a different approach and provide smaller age-appropriate assessments available to more of their employees, transforming their company into one that promotes the health of its employees. This ensures that their most important employees have access to the top-notch, convenient, hassle-free primary care required to fit their busy lifestyles and keep them at peak productivity for as long as possible.
If you would like more information about how we can help please don’t hesitate to contact our team. We will be delighted to help you with any information you require and would gladly start our onboarding process as soon as possible.