When there’s an emergency, we often run through a checklist in our heads of things we should have already taken care of. Do we have a will? What will happen to our children if we’re not around? Did we invest wisely?
The reality is that most people don’t prepare fully for emergencies. Although that checklist is a good place to start, a thorough personal preparedness plan is a good idea for all families and a must have for high net worth (HNW) individuals with complex lifestyles.
For most insurance agents and brokers, the preparedness topic quickly translates to disaster preparedness. You know, that annual conversation you have with your client right before hurricane season starts on June 1. Or maybe it’s the conversation you have with your client prior to wildfire season or spring flooding. Whatever triggers a preparedness conversation, the fact is that most advisors are simply scratching the surface.
True personal preparedness means looking beyond the obvious and helping clients assess risks that would likely occur based on their family and lifestyle. From there, it’s crucial to systematically create a list of actionable steps to take when faced with an emergency.
Components of a personal preparedness plan
A comprehensive personal preparedness plan should cover the following at a minimum:
- The emergencies most likely to happen
- An action plan
- A communication plan
- Personal safety
- Protection of property
- Cyber safety
Does your family know what to do in case of a fire in your home? (Photo: Shutterstock)
1. Identify emergencies most likely to happen
Every preparedness plan needs a firm base. The first crucial step to creating a preparedness plan for your client is to identify emergencies that are most likely to happen to them. It’s important to keep in mind that emergencies affect not only people but assets as well. Here are a few examples:
- Natural disasters, including weather-related and seasonal events such as hurricanes, wildfires, flooding, tornadoes, winter storms or landslides
- Infrastructure failures, for example, the California dam system failure.
- Travel concerns, such as life safety, kidnap and ransom.
- Terrorist threats.
Is the emergency kit well-stocked? Are items replaced when they're too old or have been used? (Photo: Shutterstock)
2. Create an action plan
Once the list of potential emergencies has been created, it’s time to create an action plan. The plan should be specific to each emergency and should assign roles and responsibilities to all family members. Consider these questions:
- Who will be responsible for the disaster kit?
- Who will monitor the updates and news?
- Who will be in charge of pets, manage all family documentation and medication?
- Who will keep the family contact/communication plan up to date?
- Who will be responsible for the protection of property?
Related: 4 ways to safeguard jewelry
Have emergency contact information for all family members, including those who don't live with you. (Photo: Shutterstock)
3. Detail a communication plan
A communication plan is critical in ensuring that all family members are accounted for safely and have access to necessary resources. It should include names and contact information for all family members, meeting places if evacuation is necessary, knowledge of where school children will go, and even an emergency contact number outside of the local area that family members can call to check-in.
Depending on the scope of the disaster, family members may have better luck getting through to out-of-town connections versus relying on local ones.
In creating the communication plan, you should ask, “If something happens during the workday, where are my family members likely to be, and how will we stay connected if we are not together?” This question should be considered for everyone in the family and should account for different schedules based on the time of day.
Have you made sure that non-traveling family members know where you're going to be and when? (Photo: Shutterstock)
4. Think about personal safety
When we’re children, we learn about personal safety. We’re taught to avoid talking to strangers and to not walk home from school alone. We practice fire drills and evacuation plans at school, and at work as adults, and carry bits and pieces of this knowledge with us. But how often do we really think about these things in our personal and home lives? Not as often as we should.
These questions should foster conversation and raise awareness with your clients as they begin to proactively think about personal safety.
- Are smoke and carbon monoxide detectors in working order and tested on a regular basis?
- Are all household fire extinguishers in working order? Do family members know where they are and when and how to use them?
- When family members travel, is there a commitment to share itineraries? Are safety protocols for the area understood and discussed in advance?
- When traveling, do you know how to keep up to date on pending dangers that you may not be accustomed to, such as wildfires?
- Do family members enroll in the State Department’s Smart Traveler Enrollment Program using the Smart Traveler App?
If you have a backup generator, be sure someone is trained to operate it properly in case of emergency. (Photo: Shutterstock)
5. Protect property
At this point in the plan, you’ve already identified assets that can be impacted by emergencies. For each vulnerable asset, a plan must be put in place to safeguard and protect the property (real and personal), for example:
- Who is responsible for getting storm shutters installed when you get a hurricane warning?
- Who is responsible for coordinating the removal of valuable articles and property before the pending emergency?
- If the property will stay on site, who will activate the shelter to protect and minimize damage?
- Who is responsible for testing sump pumps and making sure sufficient battery backup or generator power is available in case of a power outage?
All electronic devices should have anti-virus software, not just personal computers. (Photo: Shutterstock)
5. Manage cyber safety
As technology expands so do risk factors for high net worth clients. Traditional hackers have targeted personal computers, tablets and smartphones. New cyberattacks are targeting smart-home devices. These new vulnerabilities allow someone to monitor lifestyle patterns through connected thermostats, lighting systems, smart TVs and IoT [Internet of Things] security-based systems, all technology typically owned by high net worth individuals.
Each family should have a strong cyber safety plan that is understood and followed by all family members. The plan should account for the activities of all family members, all electronics and connected devices, and all networks the family uses to connect these devices. The plan should include an audit and assessment of risk exposures, including how to obtain professional guidance during a crisis.
Some great questions to ask your client to begin the conversation include the following:
- Have you conducted a data privacy and security risk assessment of your home network and devices?
- Do you use personal devices or accounts, such as email to conduct business including financial transactions?
- Do you store sensitive data in your personal devices or accounts?
- Do you have a response plan for what to do in the event of a privacy or security incident?
- Are you aware of the information being shared on social media by family or friends and the risks that may arise?
- Do you discuss cyber risks with family, business colleagues and your financial service provider?
Raising awareness and helping your client create a personal preparedness plan is crucial to maintaining a personal risk management strategy. The plan should be detailed and specific and should cover all potential risks that can be monitored, updated and tested regularly.
Most people don’t plan for emergencies and pay the consequences. For high net worth clients, those consequences can be costly. It’s important for any agent or broker working with a high net worth client to not only understand the risk but to help their client plan for those risks.
Lisa Lindsay is the executive director with Private Risk Management Association (PRMA), a nonprofit that was formed to empower and provide a forum for insurance, wealth management and related disciplines, to share insights and drive issues that improve the advice, coverage and service offered to high net worth insurance consumers.