Every so often a business is impacted by a personal event that happens to one of its key people.

Out of this situation key person insurance was born. This is an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member or members of the business specified on the policy. The aim is to compensate the business for losses and facilitate business continuity. (Wikipedia has a very succinct article that includes details on what can constitute an insurable loss –http://en.wikipedia.org/wiki/Keyman_Insurance.) Businesses both big and small can benefit from such protection.

Common Risk

There are other personal circumstances that can interfere with someone’s ability to perform on the job that are not insurable by key person insurance – because they happen to family members or don’t physically incapacitate the employee. When families are not prepared, emergencies can be devastating. When that devestation impacts an employee, especially a senior person, ability to perform on the job can be seriously compromised, despite intense dedication.

Cisco’s Leadership Example

The Cisco Family Assistance program¹ provides short-term, emergency resources to help employees deal with a serious medical condition, the death of an immediate family member, or the impact of a disaster.

A recent example of assistance offered to Cisco families came about during the wildfires in Southern California that occurred in October 2007. These fires had a severe impact on several neighborhoods and left hundreds of people in the area homeless. Cisco accounted for Cisco employees, determined which ones were affected, and offered support in the form of hotel accommodations for those who could not easily locate lodging.

Cisco can go even further, loaning its Network Emergency Response Vehicle (NERV) to emergency responders. This enables us emergency teams to allocate resources properly, deploy them more quickly, and conduct their mission in a safer manner. For details of how theSan Diego County used NERV to save structures and lives, use this phrase in your favorite search engine: “Sheriff’s Department Increases Situational Awareness During Fires”. You’ll find acase study (PDF file) worth downloading and reading.

Going Further

After the immediate danger is handled, what next? Credit ratings can be ruined becuase bank and bill paying records are lost, or because the bill payer of the household is incapacitated, and no one else knows where the records are and what the routine is. That can happen in more common circumstanced than a natural disaster. If an auto accident or serious illness takes the bill payer “offline”, it can take another family member days to figure out how and what to do, for things that the bill payer used to do in a few hours. If anything is missed, credit ratings can suffer and even utility services can be turned off.

Other devestating circumstances can occur without any physical accident or injury. A very targeted and individual circumstance is Identify Fraud, commonly called Identity Theft. A web search for “identity theft statistics” will provide detailed reference information. Here are some examples²:

• Victims spend from 3 to 5,840 hours repairing damage done by identity theft. This difference is due to the severity of the crime – for example a lost credit card versus the use of your social security number to become your “evil twin.” The average number of hours victims spend repairing the damage caused by identity theft is 330 hours.
• 26-32% of victims spend a period of 4 to 6 months dealing with their case and 11-23% report dealing with their case for 7 months to a year.
• Victims lose an average of $1,820 to $14,340 in wages dealing with their cases
• Victims spend an average of $851 to $1,378 in expenses related to their case
• 12% of victims end up having arrest warrants issued in their name for financial crimes committed by the identity thief

The book Know Your Life, by Jim Litchko, is available from Amazon or directly from the author’sI.C.E. Guy website (I.C.E. stands for In Case of Emergency). It is a $20.00 guide that provides practical advice, effective checklists for identifying and compiling all of your critical documents, and a process for getting your family prepared to respond effectively when an emergency occurs. It is part of the I.C.E. Family Preparation Kit, also available at the website.

In less then a day, a family can create their own “Book” and that will be the first thing they reach for when an emergency happens.

This should be a required exercise for all key personnel.

Family Preparedness

There are altruistic reasons for helping employees with family emergency preparedness, but the fact is that business are also vulnerable to such risks if they don’t do something about it.

The ideal situation is for the employee to stay focused at work, while family members at home handle the emergency. A small amount of preparation can prevent some emergencies, andsignificantly reduce the impact of others, enabling the employee to stay focused on the job.

A few 45-minute “lunch and learn” sessions about Identity Theft, Emergency Preparedness, Basic Home Security and other I.C.E. prevention and preparedness topics can mean the difference between an inconvenience and a family disaster.

Executives and security directors take note: when employees learn the concepts and value of preparedness on a personal level, it gives them greater understanding of the same concepts in the business continuity and emergency management plans of the business.

That makes for a “win-win” situation all around.

Best regards,
Ray Bernard

¹ See: www.cisco.com/web/about/ac227/csr2008/our-employees/balancing-life/family-assistance.html
² See: www.spamlaws.com/id-theft-statistics.html