How would your organisation cope with the loss of a key person?
A company’s success doesn’t rely solely on strategy or market position – it depends on the people steering it. Every day, members of the executive team and board make decisions that shape the company’s future. Yet one critical risk is often overlooked: what happens if a key person suddenly passes away?
Key Person Risk – What’s at Stake for Your Business?
A company’s success isn’t just about strategy or market position – it’s about the people behind the decisions. Every day, members of the executive team and board shape the company’s future through the choices they make. But there’s one risk that’s often overlooked: what if a key person suddenly becomes incapacitated or passes away?
Many companies have extensive insurance policies to protect their operations, properties, and assets. Risk management often covers cyber security and liability issues. Yet few are prepared for the consequences of losing a CEO, CFO or another critical individual.
From the board’s and management’s perspective, identifying and managing key person risks is a vital part of ensuring business continuity.
Without proactive planning, a sudden loss could lead to:
- Strategic uncertainty – Losing key decision-makers may result in an operational and governance crisis.
- Financial instability – Investors, clients and partners may lose confidence, impacting cash flow and company value.
- Recruitment and transition costs – Replacing a key person is often costly and time-consuming, especially in a crisis.
Ownership and legal issues – A sudden departure could lead to uncertainty around shareholdings, buyouts or decision-making responsibilities.
Life Insurance as a Strategic Risk Management Tool
Key person life insurance is one of the most effective ways to protect your business from unexpected human capital risks. It’s not just a financial safeguard – it’s a strategic enabler that ensures your company can keep moving forward.
How does your business benefit from key person insurance?
- A financial buffer – The payout helps cover unexpected costs, such as recruitment and onboarding of a replacement.
- Ownership clarity – Share transfers and buyouts can be handled smoothly, without disrupting decision-making.
- Maintaining confidence – Demonstrating preparedness reassures investors, lenders and partners, limiting market uncertainty.
- Securing continuity – Operations stay on track, minimising disruption and reducing the risk of a slowdown or standstill.
A Responsibility for the Board and Management
Talking about life insurance and key person risks may feel uncomfortable – but addressing them is a sign of responsible leadership. It’s the board’s and management’s duty to ensure the company is prepared and risk management is complete.
Here are a few key questions every board should consider:
- Who are the individuals critical to your business success?
- How would their absence affect day-to-day operations and long-term strategy?
- Are there clear contingency plans if a key person becomes incapacitated or passes away?
- Do your current insurance solutions provide sufficient protection – both financially and strategically?
Life Insurance is an Investment in Your Company’s Future
The loss of a key person is not only a personal tragedy – it can also become a serious business crisis. Life insurance offers a practical way to manage this risk and ensure your company can continue to thrive even in unexpected situations.
Is it time to assess the key person risks in your organisation?
Being proactive in risk management can make all the difference when it matters most. Our experts are here to help you explore the right solutions and prepare for the unexpected – with confidence.
