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Blog By:  Garry Watts, CPCU, CRM

There are hundreds of risk exposures that are impacting your business every day.  A very effective way for a business owner or CEO to deal with these issues is to identify them, and put them in three buckets.  Strategic risk, business risk, and hazard risk.  This will allow you to think through them, identify the potential impact, and proactively come up with strategies to take control of them. 

Strategic risk is a risk that has the ability to impact the valuation of your company.  Business risk is risk that impacts the day-to-day operations of your company.  And hazard risk is risk that creates a physical loss in your company. 

One of the strategic risks that affect all companies is the risk of perpetuation.   Perpetuation plans allow companies to plan for a change in ownership, but also to take into account, unforeseen circumstances such as the sudden death of the principal or a downturn in the marketplace.  Not having a perpetuation plan can force the business to close, or sell to an outsider at reduced prices.  

There are four main reasons why a firm fails to transfer the business to the next generation of owners successfully:
  • Lack of planning
  • Lack of viability of the business
  • Little desire on the owner’s part to transfer the firm until it is too late
  • No successor
So what process is in place to develop future leadership perpetuation of your firm?  If something happened to you today, what plan is in place to guarantee your family will be taken care of, and your business will continue to prosper?
Posted 10:12 AM

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