Company Profile
Strategic Solutions Partners, a national consulting firm, specializes in business and management consulting services and generates approximately $25 million in annual revenue. Structured asa corporation with five managing partners, the firm employs 50 experienced professionals. Recognizing the inherent vulnerabilities to governmental policy shifts, the firm proactively adopted an 831(b) Plan to mitigate financial impacts resulting from political and regulatory changes.
- INDUSTRY- Consulting
- SPECIFIC- Business & Management Consultant
- ANNUAL GROSS REVENUE- Approx. $25 Million
- EMPLOYEES- 50
- OWNER STRUCTURE- Corporation with 2 Managing Partners
Risk Description
Strategic Solutions Partners faced considerable risk due to their reliance on government infrastructure funding initiatives for substantial portions of their business and revenue.Traditional insurance coverages typically exclude losses resulting from political decisions or governmental policy shifts, leaving businesses highly vulnerable to sudden financial disruptions stemming from political actions.
Incident
The abrupt termination of a major government infrastructure funding initiative significantly impacted Strategic Solutions Partners. Contracts and projects previously funded through this initiative accounted for a substantial segment of the firm’s revenue. This sudden policy change resulted in severe financial disruption, initially estimated at approximately $3 million. A detailed financial analysis later determined the actual loss to be just under $2 million, representing a critical threat to the company’s financial stability.
Resolution
Strategic Solutions Partners promptly filed a claim under the Political Risk policy within their 831(b)Plan, a policy specifically structured to address financial losses resulting from adverse governmental actions. The direct writer swiftly validated the claim after thoroughly reviewing documented financial impacts and lost revenue streams resulting from the initiative’s termination.
The policy provided coverage up to a limit of $600,000, significantly mitigating the financial damage incurred by the company. This immediate financial support enabled the firm to maintain operations and stabilize its financial position during a critical transitional period, allowing resources to be redirected toward exploring and developing alternative revenue streams.
Key Takeaways
By strategically utilizing their 831(b) Plan, Strategic Solutions Partners effectively navigated substantial financial disruption caused by political risk. The case underscores the critical importance of specialized risk management coverage to shield businesses from policy-driven financial impacts that traditional insurance policies typically overlook
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