IFAs: Working from home and risk management protocols
Insurers are generally keen to understand from the businesses which they insure whether their business continuity plans (BCPs) are equipped for the COVID-19 pandemic.
As we now know this pandemic is not the event that most firms designed their Disaster Recovery and Business Continuity plans for or what they principally envisaged. For example, in the event of an emergency many large businesses based in major cities had planned to relocate their key staff to stand-by offices elsewhere in order to continue to operate. Therefore, Insurers rightly need to know whether current working practices will change the risk profile of the firm which they insure.
There are a number of good businesses which are heavily reliant on having a physical office for employees to access their paper files and records as normal; for those firms the current situation clearly presents a real difficulty.
If Howden is your broker, at renewal we will almost certainly be asking you a supplementary question with the proposal form (on behalf of Insurers) regarding whether your business is able to operate along normal / or business as usual lines. If you declare this to be the case then, in the short term, there will likely be no further questions. Although if lockdown continues for longer than currently envisaged, then perhaps further questions will become necessary. We will, of course, keep you updated on this.
Generally speaking, businesses in the Financial Advisory sector are able to operate quite normally, in that they can continue to look after clients; keeping them informed and transacting or following through on instructions. Other professional services, where they are dependent on property transactions or the housing market, are going to face more issues and resultant drops in revenue.
How to mitigate common risks resulting from the current trading environment
Assess your business partners and suppliers
It is important to ask yourself who and what your business is reliant on to operate. For example, who are your business partners? And, do you outsource any operations to anyone? How are they continuing to perform in the current situation? And what would be the repercussions for your business if they are unable to continue to provide you with services?
Increase communication between colleagues
Most businesses are used to keeping information up to date by logging this on their operating systems so that colleagues can access up to date information if needed. If the operating system is not accessible to workers at home then consider ‘buddying up’ groups of colleagues. In this case, two or three colleagues would hold daily calls and brief each other on their current activity so in the event that one of them was unavailable current work could be concluded.
Ensure your processes are fit for purpose
Ensure all diary systems capture the information you need. The way in which you used to diary forward for receipt of information may need to be tweaked and other items may need to be added to your list.
Keep within your usual remit
From a risk management perspective, Insurers have always cautioned against operating outside your usual areas of expertise. This is particularly true now, it is likely that clients will ask for your opinions on a range of subjects or will bombard you with a host of questions. Try to stick to the terms of reference which you have with your clients and the relationship which you are remunerated for and not get drawn in to providing advice outside of your remit.
Look out for our next update on the how to keep clients informed regarding the diminution of their investment portfolios and anticipate potential PI Insurance circumstances.
Steve’s team of expert brokers specialises in Professional Indemnity for Financial Advisers, Accountants, and Insurance Brokers. They always work hard to get their clients the right cover for the right price. And Steve’s deep understanding of risk management means that he can help clients mitigate their risks as well as insuring against them.