Hedging against the Illness or Loss

Hedging against the Illness or Loss of a Key Employee The illness or resignation of
a key employee may also adversely affect the performance of a firm. To
try to prevent employees from becoming ill, many firms offer a program
that enables their employees to obtain health insurance from health insurance companies. The insurance is generally cheaper when purchased
through the firm. Even if a firm provides a health insurance plan for its
employees, it may still be affected by the temporary absence of an employee. Firms can reduce the potential adverse effect of an employee’s illness by ensuring that more than one employee can perform each task. To
attempt to prevent key employee from resigning, firms can offer good
compensation and benefits.
Exposure to E-risk
Information technology has created new risks and increased the complexity of risk management. For example, there is the risk that electronic data
may be stolen and used in a manner that adversely affects the business.
Online banking and securities trading have created large exposures to risk.
These services are vulnerable to potential losses from security breaches
through network hacking, viruses, and electronic thefts. New businesses
can hire firms to establish a computer system that is protected from this exposure. Alternatively, a business may attempt to purchase insurance to
cover against loss of business income, damage to reputation, loss of intellectual property, interruption of service liability, and liabilities incurred as
a result of electronically published informatio