“Offices were so hastily vacated that very little attention was given to the consideration of the usual daily or monthly risk management duties that people undertake while at the office. If and when teams return to the office, it often isn’t at full capacity, again having an impact on the type and frequency of risk management activities needed to protect staff’s wellbeing while in the office,” says Philippa Wild, head of commercial underwriting at Santam.
Here are some of the potential risk management considerations to emerge with vacant or partially occupied office spaces:
1. Threats of fire: Fires are considered the number one risk to businesses. In the current climate, one large fire could tragically be the catalyst to close a struggling business, permanently. A lapse in fire safety maintenance could increase the risk of a fire. For example, if a generator isn’t maintained, the automatic sprinkler system could fail, which means flames could spread fast.
2. Poor maintenance and adherence to policy conditions: There are so many challenges for business owners right now, including stressed staff and stretched cash flow. Unfortunately, maintenance and security costs remain and must be met. Some policies have conditions that certain equipment is regularly serviced, or alarms systems are tested, for example. If this doesn’t happen, a claim may be affected, should an incident occur.
3. A changing risk environment: Not only does one need to evaluate the impact of new and emerging risks, like cyber, but one also needs to consider how your own business’s risk profile has changed due to employees working from home (with company assets) and the extent to which your premises are now unoccupied. Intermediaries play a vital role in advising clients on new emerging risks like cyber and can also assist with reviewing policies to align with changing circumstances.
4. Business processes and reliance on business partners: Risk management needs to include consideration of reliance on business partners and supply chains. If their risk environment is changing, are they adequately protected, and risk managed? Business owners should have contingency plans in place which they can discuss with their intermediaries and purchase insurance where necessary.
Wild gives some ways to proactively manage risk:
The pandemic has increased awareness around the need for business owners to review their policies more frequently and keep their intermediary abreast of any changes in circumstance. A large part of any business owner’s risk management function is to disclose all pertinent changes to their intermediary. When they do this, it opens the door for the intermediary to appropriately notify the insurer and thus avoid a situation where there is a cover shortfall.
“While most businesses tend to renew and review their policies every 12 months, the pace with which things have changed in the past 12 months has made it clear that a more regular review of policies is paramount. Your intermediary is there to help assist you through the process,” Wild concludes.