A key person is an individual whose skills, relationships or knowledge are so important that the business would struggle without them. This might be a founder, a lead technician, or someone who holds vital client relationships.
Key-person risk
The concern, often called key-person risk, is what would happen to the company if that person were suddenly unavailable. A business that depends heavily on one individual can be more fragile than its figures suggest.
Reducing the risk
Spreading knowledge across a team, documenting processes and planning for cover all reduce key-person risk and make a business more resilient.
- A key person is hard to replace quickly.
- Over-reliance on one person is a real vulnerability.
- Good documentation and succession planning help.
When Credicorp assesses a limited company or LLP, we consider the resilience of the business as a whole, not just its current results.
See also: What is a judgment debt?, Can I ask a person to review an automated decision? and Can I pay a Flex drawing from a different card or account?.