How To Assess Key Person Risk - Barnes Commercial Limited
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Key Person Risk

How To Assess Key Person Risk

Every business has key personnel with skills and knowledge that are vital to the success of the business. These are typically people who started the company or who bring specific expertise that the business needs in order to remain profitable.

It’s therefore natural to have concerns about what would happen to the business if one of the key people was suddenly no longer there. There are many reasons that a vital member of an organisation may suddenly not be able to work for your company any longer, such as a long-term health issue, suffers permanent disability or even sadly, they pass away.

We would all like to think that nothing bad will happen and that everything will continue just as it is now, but that would an unrealistic view. Change happens all the time and the best way to manage it, is to be prepared.

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How To Prepare

Defining who the key people are in your business is the first step towards mitigating any risk associated with the loss of personnel crucial to the profitability of your business. You need to look at the skills and value they bring and what the consequences of their loss would be.

This audit will help you to look at how your business functions and how skills and knowledge are dispersed throughout your team. It will highlight areas where you perhaps have a skills gap or allow you to create a plan to ensure that no single person has all the key information.

Whilst it may not be possible to share skills and information with additional personnel, by taking an overview of the situation, you will know where the highest risks lie.

Assessing Key Person Risk

There are five key steps that we recommend you follow to assess key person risk in your business.


1. Identify your key people

This should be fairly straight forward. Create a list of the people that your business would not be able to function without – and remember this probably includes you! These people will be senior managers or those with specific skill sets that have crucial roles in your product or service delivery. Don’t worry if your list seems really long to begin with, you can revise it as you work through the steps.

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2. Identify affected business areas

Your business is made up of different functions that allow you to seamlessly serve your customers. You need to think about which areas of your business would be affected if one of your key people left. Would you suddenly not be able to fulfil orders, or would your IT infrastructure be unsupported? Core business areas to consider may include development, production, marketing and sales, along with supporting services such as HR, finance and IT.

If there are several areas that would be affected by the loss of key personnel, you will need to prioritise.

3. Identify capabilities that may be impacted

Now we have the people and the business areas, we need to narrow things down further and look at the capabilities within each business area. This could include development, planning, managing, doing or reporting. Look at each capability within the business area. For example, in production you would expect planning for the quality and quantity of the product, production scheduling such as which men, machines, materials to use, and then despatch. Which capabilities do you need for your business to operate profitably?

Again, if you find you have a long list, you should prioritise those that will have the biggest impact on your business.

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4. Define the risk

To help us assess the risk we need to add more details about the influence of the key person for each capability. This means looking at how much influence, and therefore how vital, the key person is – does this person make the decisions, hold vital skills or have detailed knowledge? This will need to be done for each capability. For example, if you design and manufacture specialist electrical equipment, a senior design engineer leaving could leave you without the ability to finish the design of a new product component. If your business relies on this skill set to remain profitable, their loss could be significant – it’s likely to take time to find the right replacement, leaving your business unable to produce the products required to satisfy customer requirements.

5. Prioritise the risk based on impact

The information collated will allow you to see which people within your organisation have a significant impact on your capabilities and your ability to operate profitably. The final step is to decide on the scale of impact to allow you to prioritise the key person risk in your company. For example, if there’s a change in your ability to plan production, what would the impact on your order fulfilment be?

You can identify areas that rely on one person, and therefore, will be a higher risk than those where several people have input and knowledge.

Good for your business

Not only will this process allow you to identify the key personnel in your company, but it will also help you to manage skills and knowledge sharing. Whilst some business information will need to remain with senior management, you might identify gaps in employee knowledge or skills that can be remedied through training or mentoring.

Identifying these areas will ensure that you can address them before they have the opportunity to impact your business.

If you would like assistance assessing your key person risk, as part of your risk management strategy, please get in touch and we’ll be pleased to help.

You can contact us on 01480 272727  or you can email us at


Vikky Littlewood

Authored by: Vikky Littlewood

Marketing Manager

12th July 2021