Jump Starting Strategic Planning with the Family Risk Roadmap

Launching an effective family enterprise plan can be a daunting task yet it is essential to the long term sustainability of the family and its wealth. This 2012 FOX Fall Forum session detailed a framework for understanding the planning process and explored the changing risk environment for wealthy families.

Some highlights include:

• Simply stated, risk is the possibility of an adverse outcome. For wealthy families, it is the threat to a family’s long-term wealth across multiple family generations.  
• The FOX risk “honeycomb”encompasses global/systemic, family, financial and business risks. 
• Responsible wealth owners take an active interest in risk. 
• Managing risk and opportunity to strengthen the family enterprise in a rapidly changing world is a complex endeavor that demands multidisciplinary expertise.
• Families who succeed in maintaining their wealth on an inter-generational basis are intimately involved in working with their advisors to analyze their goals and their shared assets (financial, human, philanthropic and business capital) in a strategic manner.
• The family strategic enterprise plan is the indispensable organizing principle for preserving and growing the family’s wealth, and risk planning is merely a supporting instrument
• Regarding family risk, participants noted a number of areas of focus: the need for transparent, accountable family leadership and a leadership succession plan; effective communication channels (both for regular feedback, and to deal with potentially difficult conversations which may require outside facilitation); structured family education programs; and a strong system of family governance to facilitate decision-making and foresight.
• In terms of the family office, ensuring that the service model is adapted to the evolving needs of family members is a continual challenge. As family offices adjust their advisor ecosystems, this also embodies risk for families as they unwind certain advisors and integrate their successors, not least due to loss of institutional memory
• When developing a strategic enterprise plan (one which unifies family business, family wealth and family office strategies), it is important to bear in mind that family members, family office executives and external advisors have distinct, complementary roles.