On 24 February 2021, a devastating fire occurred at the western part of Singapore. The unfortunate incident has so far resulted in 3 deaths, leaving 5 in critical condition and many others suffering from burn injuries. Such accidents cannot be avoided regardless of the strictest safety measures that the authorities and business owners may have put in place.
Let’s take a look at the impact of this unexpected accident on the parties involved.
The owner of the premise where the fire started will likely be responsible for:
- Taking care of the family of the deceased employees;
- Supporting injured employees and their ongoing medical expenses and living allowances;
- Fulfilling customer orders as production will be stopped/affected;
- Payment to suppliers;
- Recalling of credit facilities from financial institutions;
- Payment of compensation to third parties that have suffered damage; and many more.
The third parties involved will be affected in some ways, where:
- The injured and deceased individual (both employees and others) will claim for damage; and
- Neighbouring companies that may have suffered damages or even had to stop their business will claim for damages.
Accidents can happen to anyone, and at any moment in time. It is a question of the degree of severity and to whom did the accident occur. It could be a cut in the hand, a fall, a car crash or like in this case, an unexpected fire. One of the ways concerned business owners can mitigate and manage these factors is by incorporating Risk Management Measures.
These can include:
#1: “Compartmentalising” assets of different risk
Assets of different risk should not be held in the same company. Property, machinery, vehicle and cash in the bank are assets of low risk. The business itself has higher risk. It is important to have different entities set up to hold different assets of varying degrees of risk.
#2: Having sufficient insurance coverage for business
It is essential that companies regularly review their fire, public liability, loss of profit and other forms of insurance appropriate to the business. Sufficient coverage is key as the risk is insured and transferred to the insurance company. This will ensure that the company’s financial position will not be greatly affected upon the occurrence of unforeseen events such as the fire.
#3: Putting in place Employee Benefits
Employees should be provided with sufficient Death, Total and Permanent Disability and Accident coverage. This will ensure that the employees and their families are taken care of if the employee dies or becomes disabled or injured due to the accident.
#4: Ensuring there is Keyman Protection
Keyman Protection compensates the company for loss of profit arising from the death of the keyman. If one of the persons that dies is a keyman to the company, the impact to the company will be even greater. With Keyman Protection, a lump sum payout from the insurance company can help to provide liquidity to the company.
To learn more about how you can tailor Risk Management Measures to meet your unique business needs, you can connect with me today for a discussion!