Partially occupied offices a risk for business owners 

Thabo Twalo, Chief Underwriting Officer at Santam Broker Solutions 

While several large companies have spearheaded a gradual return-to-work, the hybrid working model has remained sticky for many South Africans. The latest BrandMapp survey indicates that as of 2023, 54% of “mid-market-and-up” South Africans are either following the hybrid work trend or working permanently from home. 

Brokers should alert their clients of the potential risk to their properties and assist then in putting the needed risk management measures in place. 

The reality is, offices still aren’t at full capacity. Every business owner needs to be a risk manager – prevention is always better than cure. 

Office capacity has an impact on the type and frequency of risk management activities needed to protect staff well-being while in the office. 

Some of the potential risk management considerations resulting from partially occupied office spaces: 

Threats of fire 

Fires are considered the number one risk to businesses. One large fire could tragically be the catalyst to close a struggling business, permanently. A lapse in fire-safety maintenance could increase the risk of a fire. For example, if a generator isn’t maintained, the automatic sprinkler system could fail, which means flames could spread quickly. This becomes even more important as the potential for early detection by employees is reduced, as offices are not fully always occupied. 

Poor maintenance and adherence to policy conditions 

Business owners face numerous challenges, such as dealing with stressed staff and managing tight cash flow. Despite these challenges, it is crucial to ensure that maintenance and security costs are covered. Some insurance policies may have specific conditions, such as requiring regular servicing of equipment or testing alarm systems. Failure to meet these requirements could potentially impact a claim in the event of an accident. 

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A changing risk environment 

Not only does one need to evaluate the impact of new and emerging risks, like cyber and increasing severe weather events, but one also needs to consider how their own business risk profile has changed due to employees working from home (with company assets) and the extent to which their premises are now partially occupied. Intermediaries play a vital role in advising clients on new emerging risks and can also assist with reviewing policies to align with changing circumstances. 

Business processes and reliance on business partners 

Risk management needs to include consideration of reliance on business partners and supply chains. If their risk environment is changing, are they adequately protected, and risk managed? Business owners should have contingency plans in place, which they can discuss with their intermediaries and purchase insurance where necessary. 

Ways to mitigate risk when an office is partially occupied: 

·       Maintain equipment: Ensure regular maintenance and servicing of equipment, such as fire-fighting equipment and plant and machinery, are undertaken if due. 

·       Alarms need to be tested, function properly and be activated when needed. 

·       Ensure sprinkler systems have been inspected and certificates issued. 

·       Obtain gas compliance certificates if due. 

·       Ensure electrics are in good order ̶ these are the most common ignition sources of fire. Should there be any doubt, get an external contractor to conduct thermographic infrared imaging of the electrics of the building. 

·       Ensure all the certificates of compliance are in order and safely stored should anything happen at the premises. 

·       Ensure your fire teams are in place and arrange firefighting training for new staff from an accredited provider. 

·       Ensure your insurance policies are up to date. Work with an intermediary who can advise you appropriately, especially where your risk circumstances have changed, for example, if vehicles are being driven less. 

The shifting risk landscape has increased awareness of the need for business owners to review their policies more frequently and keep their intermediary abreast of any changes in circumstances. A large part of any business owner’s risk management function is to disclose all pertinent changes to your intermediary. Doing so opens the door for the intermediary to notify the insurer accordingly which helps to avoid situations of cover shortfall. 

While most businesses tend to renew and review their policies every 12 months, the pace of change has escalated in the last 4 years – making it clear that a more regular review of policies is paramount.