Despite a core reliance on employees to keep a business up and running, people risks are still often overlooked by leaders and businesses.
With over 70% of self-employed businesses shutting down due to serious injury, person loss presents a real danger, especially to an SME which may rely on a small number of key people to keep its business running. However according to insurance broking and risk management firm Marsh, there are many things advisers and risk managers can do to help both large and small businesses mitigate these risks, and to ensure that a business is not hit by preventable people losses.
“We identified a number of risks in our People Risk Survey Report, and the key takeaway for us is how we can help businesses put that information into action,” Mercer Marsh benefits leader for New Zealand Alison Bamford told Insurance Business.
“A lot of it comes down to data, which can help build a business case for addressing people risks and identify a solid return on potential investment. Once the business case is pulled together, we’re more likely to have that senior leadership buy-in that we’re currently lacking.”
Bamford says one statistic to note is that many people are returning to New Zealand after a number of years abroad, and they come back with an expectation that they’ll have the same level of benefits here as they did overseas.
“This often isn’t the case, and it’s certainly a challenge,” she stated. “It’s a low-wage environment at the moment and we haven’t had a lot of wage growth for some time. However, benefits can be seen as a way of helping that side of things and preventing talent loss.
“For us, it’s about putting plans in place to mitigate some of these risks and attract the right talent. Benefits do play a large part in terms of overall value proposition, and there is a whole raft of initiatives that businesses should have in order to retain key talent.”
Bamford says that for many businesses, it comes down to cost and conflicting priorities. Businesses are grappling with a number of challenges and risks; disruption, regulation and cybersecurity being among them, and people risks can often be put to the side. Nonetheless, being fully insured for person loss can be vital in ensuring that a business survives a loss.
“Key person cover becomes a really critical benefit, especially for SME organisations where it’s one or two key people driving a business,” Bamford said. “Large companies tend to put broader strategies into place, but for a small to medium sized business, it is a really critical component of risk mitigation. But it’s something that these businesses do often overlook, and they forget their reliance on the one or two key people who keep the business going – and that’s where the advice factor becomes really important.”