Could Your Business Cope If You Fall Sick? Here's What You Need In A Risk Register
What would happen to your business on an operational level if you, the owner, became incapacitated and couldn't run things day-to-day? A risk register is vital for companies, check out these tips.
Corporate crisis planning has been a hot topic in recent months, mainly around how to survive the economic impact of COVID-19. But alongside adverse market conditions, you need to be prepared for a genuine possibility that’s often overlooked: what would happen to your business on an operational level if you, the owner, became incapacitated and couldn’t run things day-to-day? A risk register is vital for companies to identify any potential threats, and this scenario should be near the top, whether it’s related to coronavirus or a different situation entirely. Once the risks are identified, you can design a mitigation strategy to minimise their effects, and there are several procedures that you can implement to keep your business afloat if this circumstance occurred:
1. Appoint a power of attorney The thought of ceding control to a third-party is a tough idea for any entrepreneur to swallow, but it’s always advisable to have a general (or special) power of attorney in place, allowing a trusted individual to make crucial decisions on your behalf. It’s important to spend time on the legal document so that you and the appointee are completely clear and comfortable with the parameters; that way you can control their level of authority and the specific circumstances of their involvement. The individual should be someone you believe to be competent and who you are in regular contact with to keep them informed. Non-executive directors are another good source of expertise in general, and to help stabilise things during a difficult period.
2. Consider a General Manager position Adding a General Manager onto the licence means the company can continue to carry out “business as usual’ transactions. Again, this needs to be managed carefully as the person will have full power provided to them by the Memorandum of Association. Having someone in this position will also provide reassurance to your staff that the company can be managed appropriately in your unexpected absence. Even the most loyal and longstanding employees may look for other roles if they believe their position is at risk or their salary won’t be paid on time.
3. Communicate clear company roles The roles and responsibilities of everyone in the business need to be outlined clearly. Therefore, someone will be able to take over another persons’ role if temporary changes need to be made and tasks won’t fall through the cracks. This is especially relevant for banking protocols and finance responsibilities in order to make payments. If it is you who is usually in charge of payment approvals, you can reduce risks by nominating one person to set up a payment, then another to approve it. Limits can also be introduced to guard against fraudulent activities.
4. Understand the contractual implications If your incapacity could impact the delivery of goods and services leading to a breach of contract, it’s imperative to consult with a qualified legal representative as part of your crisis planning to examine the potential outcomes and options. It may require certain clauses written into your documentation and many standard contracts have certainly been reevaluated in the wake of the pandemic. If something does happen, you (or your nominated party) has to communicate with clients as soon as possible and work with them to manage expectations. Surprising clients with delays, or worse, could cause major problems long-term.
5. Explore outsourcing support Pre-identifying and assessing outsourcing providers is good continuity practice should you ever need to enlist their help quickly. This can free up time in areas, such as accounting, human resources, and PRO services, so that the person in charge can focus solely on operations, and tackle any immediate challenges to the lifeblood of your business.
6. Maintain a work-from-home model In the context of COVID-19 (or any future global healthcare threat), you should develop a detailed plan in case an infection means that the whole organisation has to isolate again. The majority of companies simply didn’t have these kind of plans in place before, meaning they were forced to think on their feet resulting in a significant amount of disruption. Create a strategy so work flow can continue, meetings happen, and clients receive the highest level of service.