Most small firms are failing to protect themselves against the threat of losing a key worker despite worrying about its impact, new research has found.
Over half of small to medium size business (SME) owners fear the impact of the death or serious illness of a key employee to the future of their business, according to Scottish Provident's Business Protection report.
However few companies are protecting themselves against the risk of such serious impacts.
It revealed that 56% of small business owners felt the death of a key employee would have a very severe or serious impact on their company.
This was mirrored by 54% stating there would be severe problems if a key employee contracted a serious illness that put them out of work for six months or more.
And over one in five (21%) believed there was a fairly high chance (at least one in three) of losing one a key employees to a serious illness for six months or more before retirement.
The provider found that, in spite of this, only 25% of SMEs have key employee or keyperson insurance in place.
Although a slightly greater number (27%) hold partner or shareholder protection products, just one in five (21%) have a form of business loan protection.
Susan Barclay, head of marketing at Scottish Provident, believes the results highlighted a worrying trend of companies leaving themselves vulnerable.
"While small businesses are showing concern about losing a key worker to a critical illness or death, precious few seem to be acting to safeguard their company in that eventuality," she said.
"The statistics are frightening - in a business with four key male employees, there is a 29% chance one will die before retirement and a 68% chance that one will have a critical illness," she added.
The survey also queried why businesses had not taken out protection.
One in five (19%) said that they had never thought about taking out a policy, 15% had no idea why they haven't taken out such a policy and 6% felt that key employee protection is too expensive.