What Is Keyman Risk?

Much has been written about 'key man' risk — the danger for corporations that rely on one or a few individuals — and its impact on business value. Fashion firms with a celebrity designer, for example, or asset management firms with a star investment manager, are particularly vulnerable.

What is key person risk?

Definition. Key Person Risk indicates the Risk generated when significant organizational knowledge, visibility, status or performance rely to a significant degree on a single individual. The reliance on a key person exposes the organization to the risk of significant financial or reputational loss if.

How can Keyman risk be prevented?

Have plans in place. Companies can help manage a key-person loss by having a plan in place, as well as an insurance policy on that person to defer the financial risk when applicable; a person's age or a serious medical condition may prevent someone from being insured.