Are you on top of managing the risks facing your business?

What would happen in or to your business if a key member of staff should suddenly no longer be around? Would your business be able to carry on as normal or would you suddenly have a crisis on your hands?

Small to medium-size enterprises in particular can be especially vulnerable to the loss of a key member of staff, and some may even be forced to shut down as a result. However, even large organisations can be left vulnerable if they should suddenly experience the loss of an employee who plays a vital role in their operations.

Having in place a robust succession plan for staff in crucial areas of any business is vital for enabling the business to be able to successfully manage a sudden or unexpected departure of key talent.

The biggest internal risk facing any business
The findings in a recent Directors’ Risk Survey Report, produced by the Institute of Directors and Marsh, a global leader in insurance broking and risk management; gives excellent insight into the issue.

Talent attraction and retention, including being able to weather the loss of a key member of staff, are cited as being among the biggest internal risks facing the organisations surveyed. Yet, surprisingly, despite their concerns in this regard, nearly a third of the directors responding to the survey acknowledged that they did not have the necessary plans in place to manage such risks.

Dealing with the gig economy
Lack of such forward-planning is even more concerning given the current highly-competitive and tight labour market, and the growth of the ‘gig economy’, a fast-developing labour market that is characterised by short-term contracts or ‘gigs’ as opposed to the more traditional permanent jobs.

In fact, as digital businesses or those requiring specialised skills become more common, and drive up the demand for specialised workers, the gig or on-demand economy will continue to expand. A study by market research consultancy Intuit predicted that by 2020, 40% of workers in the United States would be independent contractors – and here in New Zealand we’re certainly not unfamiliar with the growing trend to more flexible, independent work contracts.

Surviving the war on talent
However, as workers in the gig economy look for greater flexibility in the roles they accept, the people risks associated with attracting and retaining the crucial talent that businesses need to be able to survive will also increase.

Businesses finding themselves in the midst of what some are calling a “war on talent” need to quickly take the necessary steps to manage these sorts of people risks. Steps that include things like the following:

1) Developing robust succession plans,

2) Investing more in their employer brand so they can attract the talent they need,

3) Focusing on development and retention strategies so they get to keep the talent they’ve attracted, and

4) Satisfying the requirements of the workers of the future by offering, among other things, more-flexible working conditions and employee benefit programmes that are relevant to such workers.

Other risks facing businesses today
The Directors’ Risk Survey Report did not, however, only highlight the above-mentioned people-related risks that are facing businesses today. Other risks highlighted included the growing cyber threat and the risk this poses in the shape of IT disruption and loss of data, as well as the risk to brand and reputation.

However, irrespective of the nature of the risk, what is abundantly clear from the above is that businesses today are operating in a fast-changing, complex environment – and, as a result, they are also having to face an equally complex and fast-changing array of risks that they need to manage effectively if they want to remain competitive and viable.

Managing risk with the right insurance cover
Managing risk effectively goes hand in hand with ensuring your business has the right level of insurance cover to be able to deal with whatever surprises the world of business might throw at it.

Bonded NZ Limited provides specialist insurance services for the New Zealand market, offering businesses expert advice on how to manage a wide range of risks, and the appropriate and cost-effective options available for doing so. To ensure you have adequate insurance cover to protect your business in case the unforeseen should occur, get in touch with one of the team at Bonded NZ today to find out more about how we can help you manage risk in your business.