Key Person Risk
Key Person Risk indicates the Risk generated when significant organizational knowledge, visibility, status or performance rely to a significant degree on a single individual.
The reliance on a key person exposes the organization to the risk of significant financial or reputational loss if
- the individual ceases to be part of the organization (e.g. due to health, career choices etc.)
- stops performing or behaving according to expectations and agreements
Issues and Challenges
Key person risk is a form of Concentration Risk, but it is not traditionally discussed alongside the traditional types of Concentration as the structure of an Organization is usually not subject to formal Risk Analysis.