In the Exit Planning methodology Risk Management for business is called De-Risking. Not only do you have all the normal personal risk, (like the 6 D's) you now have to deal with the risk as an owner, and an operator.
We are not trying to get rid of all risk. Rather we are trying to decrease the unnecessary, unprofitable risk so that we have more RIsk Capacity to use on profitable, and necessary risk. It is also about Optimization, and taking care of people.
De-Risking to Prepare for Value Creation Or Growth Acceleration
There are three main prevention planning Topics in De-Risking and they all also touch the topic of Legacy.
Operational Continuity is the ability of a system to continue working despite damages, losses or critical events.
If an "act of God" happens will your insurance even protect you?
Ownership & Leadership Continuity is a strategy for passing on leadership roles and developing the next generation.
Every owner will exit their business, but few are wise enough to prepare for it.
This is complicated further when it comes to family businesses.
Also sometimes called Business continuity planning (BCP), it is a process of creating a system of prevention and recovery from potential threats to a company.
- Cyber Attacks
- Natural Disasters
- Environmental Danger
If your CEO, CMO, CFO, and COO were headed to diner and got in a bad car wreck... they got hit by a bus and are in critical care at the hospital.
- How would your businesses operate over the next days or weeks?
- Are operational systems in place to make sure the business survives a Key person loss?
- How would all of the families be taken care of while they recover?
- What if they died?
- How are you going to handle all the grief, anger, and conflict created?