Business owners spend considerable time planning for growth, managing risks and protecting the value they have built. Yet one of the most significant risks can be overlooked: what happens if a key role player is suddenly no longer able to fulfil their role? Whether it is a founder, executive board member, or head of a critical division, their unexpected death or incapacitation can have far-reaching consequences.

A well-considered contingency plan for the death or incapacitation of a key role player helps guide the business through one of its most significant challenges. In many respects, it serves a similar purpose for a business as a last will and testament does for an individual: it provides direction when it is needed most.

An effective business contingency plan should address the following four key focus areas:

a. Financial protection

b. Operational continuity

c. Governance and legal planning

d. Client and public relations

Key focus areas

a. Financial protection: Protecting the financial stability of a business is a key element of any contingency plan. Business assurance can provide essential financial support when the unexpected happens, helping to protect ownership structures, cover liabilities and maintain business continuity. For a closer look at the different forms of business assurance and how they can help safeguard a business, read [Insert link to ‘The importance of business assurance’ article] in this edition.

b. Operational continuity: When a key person is suddenly unavailable, uncertainty can spread quickly. A predetermined response structure can help limit disruption. The following factors should be considered:

1. Contingency task team: Identify the individuals who will form the contingency task team during such an event. Depending on the organisation, this may include board members, the head of finance, the head of human resources, the public relations or marketing team, and the executive or personal assistants of the affected individual. The team should be tailored to the business, and each member should understand their role and responsibilities before a crisis occurs. Review and discuss the contingency plan regularly so that, if an event occurs, each person can act effectively. A responsibility matrix can help clarify roles and accountability.

   Store the contingency plan, together with all relevant documents, tools, and templates, in a centralised location that the task team can access when required.

2. Stakeholder map: Not everyone will require the same information at the same time. A stakeholder map can help identifies the interest groups affected by the contingency and determine the level of communication required for each. Key stakeholders may include:

• • Staff
  • Clients
  • Business Partners
  • Suppliers

One of the task team’s first actions should be to update the stakeholder map based on the facts of the situation. This will guide further action, especially communication. The map should identify each stakeholder group and the level of intervention required, such as communication or direct engagement. [Also refer to Client and Public Relations.]

1. Communication:
   

• • Key messages: Once the stakeholder map is updated, agree on the key messages for each stakeholder group. This helps ensure communication is consistent, clear, and transparent. Use the key messages and stakeholder map to prepare and distribute relevant communication to stakeholders promptly.
  • Centralised internal communication line: Decide in advance which channel will be used for internal staff communication. This could be a dedicated email account or a separate Microsoft Teams channel. A central communication line keeps messages consistent and controlled and helps protect the integrity of the communication.
  • Refer to the Clients and Public Relations section in this article for more guidance on this focus area.

1. Internal administration: The contingency plan should identify the internal administrative matters that require attention, including:

• • Financial institutions: Notify banks and other relevant institutions, and review or revoke access to banking platforms as appropriate. Businesses should maintain sound banking protocols, including segregation of duties and secondary signatories or authorisers, to avoid unnecessary delays in payment processes. Keep an annually updated record of individuals with access to banking platforms and their respective rights.
  • Sureties: Key individuals may have provided personal sureties for the business. Notify and liaise with the relevant parties where required.
  • Calendars and email accounts: Review the calendar of the deceased or incapacitated individual and cancel or reschedule meetings as necessary. Activate an appropriate automatic email response and consider redirecting the mailbox to a designated person who can manage and distribute messages for further action.
  • Insurers: Notify relevant insurers as soon as possible and confirm any policy requirements, notification periods and claims procedures that may apply. This should include reviewing business assurance policies, such as buy-and-sell agreements, contingent liability and keyperson insurance, to determine whether the relevant policy is triggered and what documentation or actions are required to initiate a claim.
  • Internal systems: Remove or update access to relevant platforms, systems, and accounts.
  • Professional bodies: Initiate the process to terminate or update memberships with any relevant professional bodies.

c. Governance and legal planning:
An event of this nature highlights why sound corporate governance is essential in any organisation. In addition to ensuring appropriate financial protection of the business, the following documents and records should be in place, reviewed regularly, and updated where necessary:

1. Shareholders’ agreement: A shareholders’ agreement is a private contract between a company’s shareholders. It sets out how the business is governed, how decisions are made, and the circumstances and mechanisms governing the transfer or sale of shares. Although not required by law, it is strongly recommended that business owners have one in place and review it regularly.
2. Buy-and-sell Agreements: For a more detailed discussion on the importance of buy-and-sell agreements, refer to [insert link The importance of business assurance] in this edition of the newsletter.

1. Memorandum of Incorporation: For a company, this will already be in place as one of the founding documents lodged with CIPC, but it should be reviewed and updated regularly. For a partnership, the equivalent document is the partnership agreement.
2. Financial record-keeping and financial statements: Maintain accurate and up to date financial records and ensure ongoing compliance with applicable laws and regulations, including the submission of relevant tax returns. Financial statements should also be prepared and maintained in accordance with the requirements of the Companies Act.

d. Client and public relations:

1. Holding statement: Issue a general communiqué to clients, business partners, advisors, and suppliers as soon as possible. A holding statement should be brief, factual, and designed to provide immediate clarity while allowing the task team time to prepare more detailed communication tailored for specific stakeholder groups. Communication may include emails, website notices, and social media updates. The recipient list should be informed by the stakeholder map referred to earlier in this article.
2. Further communication and interventions: Following the initial communication, identify the key individuals:

• • Current projects / key contracts in process
  • Upcoming projects
  • Important, strategic client relationships

Develop an appropriate action and succession plan for these matters and tailor communication to the nature and importance of each client relationship.

1. Recommended communication practices:
   

• • Avoid communicating with third parties through informal platforms such as WhatsApp. Redirect communication to email where possible.
  • As a best practice, follow up all telephone conversations with an email summarising the discussion, agreed actions and any relevant deadlines.

1. Internal communication: As noted above, use a centralised platform for internal staff communication to ensure that information is communicated consistently, efficiently and appropriately.

Ultimately, effective contingency planning is not only about responding to a crisis when it arises; it is about giving the business, its people, and its stakeholders the confidence that continuity, governance, and communication have been considered in advance. By putting the right structures, documents, and responsibilities in place, business owners can reduce uncertainty, protect value, and support a more orderly transition during an exceptionally difficult time.