Moonstone: Risk management planning
It was said in the old days that the shoemaker's children were always the ones with the worn shoes; but then in those days shoes were fixed when broken or worn through. In Durban there was even a shoemaker with a slogan that read: "Healer of heels, saver of soles."
Our function is to assist our clients to manage their risk over a wide spectrum including their worldly possessions, wealth, health, poverty in old age and many more. The question is, what do we do about our own risk management, not from the perspective of short-term cover or healthcare and the like, but the risks that can lead to the business that we have built up over years being closed down through no deliberate fault of our own?
A while ago the FSB commented in a newsletter about the lack of succession and contingency planning in broker practices they visited. The impression I got was that the regulator was not overly concerned about the welfare of you and your dependents - they wanted to ensure that your clients would not be left in the lurch in case you matured prematurely, in a manner of speaking.
Before you can address your client's needs, you first need to establish what they are, not so? If so, then what about your own?
In an article on this topic for our compliance clients aptly titled "Failing to plan is planning to fail" we suggested the following:
"To start with you need to identify the risks pertaining to your particular type of business. An FSP knows that he is authorised in terms of the FAIS Act, and it is a condition of his authorisation that he must comply at all relevant times with the Act and the subordinate legislation pertaining thereto. He is also required to comply with other legislation that may be applicable to his type of business.
Once listed, all identified risks must each be assessed in terms of the likelihood of it occurring, and if it does, what the impact thereof will be on the business. Risk must therefore be rated accordingly as high, medium or low.
You then need to decide on appropriate processes or methods which will assist you to control or avoid the risks and identify the person/s in your business who will bear responsibility to manage it.
Lastly you need to attach time-frames to the different actions, otherwise decide whether it will require on-going attention."
Most of the smaller practices falter at the first hurdle; it is far easier doing a needs analysis for a client than wading through the forest called FAIS and determining your obligations in terms thereof. Through interaction with our compliance clients it became evident that there may be a blueprint, but there is no "one size fits all" solution to the problem, so we are running an interactive workshop in June to assist them with drawing up personalised risk management plans.
Compliance has become the buzz word in the industry, but as we pointed out last week it is but one element of a far wider reaching business risk management plan. To safeguard the future of your business you need to act proactively in this regard and not, as my friend from Durban used to say "double cross that bridge when you get there."
