Issue link: https://www.e-digitaleditions.com/i/751848
46 FEDA News & Views This tool is a guide to start the risk management conversation with your family ownership group and executive team. In either a group planning session or a thorough survey, gather responses to these questions. Analyze the answers, looking for the areas of alignment on responses and the areas where there are divergent view- points. Use the results to prompt further discussion to move toward a consensus viewpoint on your family enterprise risk appetite and to begin the development of your risk management framework. Not all questions will be relevant to your family enterprise. You may also need to develop additional questions for the risk management circumstances unique to your family and business. Assessing the Risk Use this Conversation Starter to Expose Vulnerabilities and Develop Controls By Michael Fassler and Wendy Sage-Hayward, The Family Business Consulting Group • What is the maximum amount of leverage we will employ as a family enter- prise? • What percentage of our total equity are we willing to commit to any one investment or enterprise? • What is happening in our marketplace that will impact our reinvestment rate in order to remain competitive? • How does a continued investment in our legacy business represent our best investment alternative? • Under what scenarios would our dividend rate need to be reduced? • What type of leadership and management capability do we need to manage the risk associated with our planned growth? What is our current capacity in this regard? • To what extent is our next-generation leadership development program pro- ducing leaders that will assure our continuity as a family enterprise? • Are we willing to commit the capital and talent to manage the risk associated with this new investment? • If we accept this risk, what opportunities are we foregoing in the next three years? Five years? • What checkpoints do we need to ensure we have sufficient family com- mitment in the long term, and to manage through a significant economic downturn? • What external market factors may impact our ability to generate return on equity consistent with the past? • How might our performance be affected if we make this strategic decision/ investment? continued on page 50 RISK DOMAIN QUESTIONS Financial Performance