Mitigate risks by being well-prepared
Risk Management
Measures
Measures
If you think you have planned for every risk and contingency, you should consider this:
HONG KONG LIFE - Business InsuranceKeyman Insurance SolutionP.1
Caution is the key to a business operation
Without a succession plan, losing a key person
could be devastating to your business:
Clients/
Business Partners
Loss of business
contacts and
collabrations
Employees
Business disturbed
as employees
become anxious
Creditors
Confidence crisis
leading to
tightening credit
What if your key
person suddenly dies or
loses ability to work?
Without their leadership, your company
suffers an immense blow and business
drops significantly. Even if a new leader
is employed, it takes time, expense
and effort before he fully
steps into his duties.
Profits
Decrease in profits
due to disrupted
operation
Expertise/
Experience
Loss of expertise and
experience with a
new successor
talking over
Investors
Less goodwill as
uncertainty grows
Your company needs Keyman Insurance Solution to avoid this sudden and
significant disruption
Keyman Insurance is a contingency plan that facilitates
business recovery after a crisis
Example
Mr. Chan is the chairman of a listed company founded by his family. Under his competent CEO leadship, he leds the compant's business to flourish. Unfortu-nately, the CEO passed away in a car accident. Losing its key person costs the company, prompting a sharp fall in its share price...
Fortunately, the company has taken out a life insurance plan for CEO as Keyman Insurance Solution, the company receives a timely cash
copmensation.
After receiving the lump-sum
cash compensation:
cash compensation:
Clients/Business Partners
Client and partner’s confidence restored
Profits
Profit losses compensated by insurance compensation
Creditors
Repayment of debts through the insurance compensation
Employees
Speeds up business recovery and moral boost
Expertise/Experience
Costs of new CEO employment covered by insurance compensation
Investors
Share price stabilised as the company announces an advance risk management plan in place
If your business partner passed away suddenly,
would all your hard work be lost?
Sudden
death of a
partner
An inheritor
takes over his
shares
Inheritor participates in operation
Conflicts may arise as the inheritor has no relevant experience or a different business vision
Inheritor sells their shares
Who will take over the shares? What is the reasonable price?
An interruption to business and uncertainties over share ownership can easily lead to infighting ,
resulting in heavy losses for the company.
To avoid negative impact on operations that might cause severe losses,
a shut-down or liquidation, you should plan ahead.
Partnership Insurance Solution sets out buy and sell
agreement ensuring business continuity
Example
Three good friends, Martin, Peter and Andy, co-found a company and it grows steadily under their management. Peter, however, suffers an acute disease and passes away unexpectedly. Martin and Andy are not only heartbroken, but face a massive change in company operations.
Fortunately, they purchased a life insurance plan as their Partnership Insurance Solution, which sets out buy
and sell agreement and prices agreed upon by all parties.
Sudden death
of a partner,
Peter.
Remaining partners Martin and Andy receive cash
compensation from the
Partnership Insurance, and
buy out Peter’s shares at
an pre-determined
agreed price.
Martin and Andy
- Have sufficient cash to continue their business
- Avoid conflicts as shares remain in their own hands
- The injected capital allows them to find a new partner for further development
Peter's wife and children
- Sell all Peter's shares at a reasonable price
- Have sufficient cash to cover their living expenses
Prepare ahead for unexpected events, and safeguard the future of your business with
a pre-arranged agreement on share transfers.
Human resources play a pivotal role in company development
However, every industry in Hong Kong faces the issue of “brain drain”
Staff Turnover Rate
20.7%
2016
2016
23.5%
2017
2017
18.6%
2018
2018
The staff turnover rate among
Hong Kong companies remains high
Faced with intense
competition, many
companies use generous
packages to retain talent.
competition, many
companies use generous
packages to retain talent.
Source: Hong Kong Institute of Human Resource Management Press Release (10 Oct 2017 & 20 May 2019)
Companies may suffer profoundly if they are unable to
retain capable employees:
High staff
turnover rate
turnover rate
Inability to
improve employee
salary and benefits
improve employee
salary and benefits
High costs to
continuously recruit
and train new staff
continuously recruit
and train new staff
The Vicious Cycle
of Brain Drain
Stagnant
development as
profits fall
development as
profits fall
Difficulty in
executing long-term
plans due to lack of
experience
executing long-term
plans due to lack of
experience
Inability to keep
clients
clients
Group life and group medical insurance plans have become basic benefits for most companies.
What benefits can be offered to employees to make them devoted to the company?
Lack of retirement protection for Hong Kong’s employees
Most companies do not provide corporate retirement protection
Average balance of only HK$186,0001 in MPF accounts
What if companies provide
employees with an annuity plan for
retirement?
Sense of
Belonging
Sense of
Security
Morale
Employees’ Voice
Hongkongers have a life
expectancy of over 80 years 2.
How will I afford long-term
expenses after retirement?
Employers’ Voice
An annuity plan can certainly
attract talent, but it affects
company cash flow. How do I
budget that for the company?
- Mandatory Provident Fund Schemes Authority MPFA Blog (July 2019)
- Hong Kong Life Tables , Census and Statistics Department, HKSAR (September 2017)
Talent Retention Insurance Solution
A mutually beneficial strategy to keep your talent
Example
Mr. Fan is a retiringentrepreneur who wants his
son to take over his business.
As an inexperienced young
man, his son is having
difficulty in operating the
company. Mr. Fan hopes to
retain capable employees so
they can help his son grew into
his leadership role.
So Mr. Fan comes up with an employee retention annuity plan for competent employee in the company
Mr. Fan’s youngest son is not familiar with business operations
The company launches a Talent
Retention Insurance Solution
Retention Insurance Solution
It encourages employees to work hard and stay longer with the
company
His son receive the assistance he needs to enable a smooth business
transiton
transiton
His son is able to take charge and gradually expand the company
Capable employee gets an income stream from the annuity plan when he reaches retirement age
Talent Retention Insurance Solution encourages talented employees to serve the company longer,
thus boosting the company’s competitiveness.
Contact Us
Make your plan early and let our professional team do an analysis of your
financial needs today. We can provide your company with comprehensive
protection and help your business grow.
2290-2882
HongKongLifeCS@hklife.com.hk
Disclaimer
- This promotional material contains general information for reference and is applicable within Hong Kong Special Administrative Region only. It is also governed by the laws of Hong Kong.
- The information provided is based on sources which Hong Kong Life believes to be reliable but has not been independently verified. Hong Kong Life makes no responsibilities nor accepts any warranty or guarantee for the accuracy, completeness and timeliness of the information or for any claims and/or losses caused thereby. Any examples given are for the purposes of illustration only.
- This promotional material is not intended to constitute a recommendation or advice to any prospective customer and is not intended as a substitute for professional advice. Please do not rely solely on this promotional material to make application decision. Before applying insurance plan, you may also seek independent and professional advice before making any decision.
- In case of any discrepancies between the Chinese and English version, the English version shall prevail.
Issued by Hong Kong Life Insurance Limited