Responding to bad news: A 5-step framework to assist family offices react to a crisis
To defend against malicious actors and negative outcomes, family offices can use complex systems and a variety of tools, including technology, education and awareness training, testing of digital networks, red teaming, frameworks, and highly trained security professionals, among others.
Your goal is to provide the family with a top-notch, impenetrable perimeter of safety.
Bad actors, on the other hand, only need to be "right" once and find a gap in our risk management plans.
Criminals will create, seek out, or stumble upon a vulnerability in your defense. You strive to be correct 100% of the time regarding your security. They can just need one defect to break through your defense plan. Your family office's risk preparations can be rendered ineffective not only by a determined adversary but also by unintentional human error or an unforeseeable event, such as a natural disaster.
Does this imply that family offices should give up and abandon all hope?
Even in the most risk-conscious families, undesirable events can and will occur. The good news is that effective methods exist for both crisis preparation and response.
Family office crisis response framework considerations
A crisis is, by definition, a high-stress situation that can prompt us to make rash decisions. Physiology and emotions can betray our ability to think clearly or paralyze crisis response measures. Creating a crisis management system ahead of time can help families deal with difficult situations.
Crisis management is how we think about and deal with threats and negative situations. It is the plan for what to do if something unexpected happens or a problem arises that could endanger people, assets, or operations.
When a family is developing or evaluating their overall crisis management plan, it can be beneficial to include a framework for crisis response that can be practiced before a negative situation occurs. Crisis response frameworks can be a series of questions that can help the family office maintain composure and respond appropriately to the issue at hand. Here is an example of a set of questions that a family and staff can ask themselves before or during (or even after) a crisis:
-
Who are we?
-
What is our mission?
-
What have we lost?
-
What do we have yet to lose?
-
What are we missing?
This 5-step framework is broad enough to be applicable in many cases, but families will need to map out their individual nuances to make it more applicable and manageable in a crisis situation. The following are suggestions families can consider while personalizing this framework:
Who are we?
-
Define “the family”
-
Determine perspective: family member vs family office staff
-
Examine external stakeholders (e.g., media, regulators, lawyers, investors, security teams, government officials, operating companies, investments, etc.)
What is our mission?
-
Determine what the family wants to achieve and what it wants to avoid
-
Define the family philosophy
-
Document the family office's purpose
-
Understand the the values of the family and relevant stakeholders
What have we lost?
-
Establish immediate personal safety levels across the family and related family ecosystems
-
Conduct immediate damage assessment
-
Who? What? Why? When? Where? How?
-
Determine potential privacy or reputation damage
-
Phone trees and prioritization of informing key stakeholders
-
Contact relevant risk management vendors
-
Assign roles and responsibilities
-
Coordination
-
Analysis
-
Response
-
Communication
-
Legal
-
Business continuity
-
-
What do we have yet to lose?
-
Determine if the family office can be nimble in responding, while avoiding hasty decision-making
-
Conduct in-depth damage assessment
-
Depth of the problem
-
Nature of the problem
-
E.g., Financial, reputation, operations, digital or physical assets, law enforcement or regulatory agency
-
-
What are we missing?
-
Leverage external perspectives and experts
-
After the event, employ lessons learned sessions to detail actions taken, what worked well, and where there are opportunities for improvement
Final thoughts
Even if the family office has done everything possible to prepare for bad situations, sometimes bad things happen anyway.
A crisis management framework can be a helpful tool to reduce confusion and speed up recovery time.
Preparing for a crisis is another defense tool in the arsenal of the family office. It can be the proverbial glass to break-in-case-of-emergency. It can help reduce unintentional mistakes in already challenging situations and help build enduring deterrence and crisis response protocols for the family.
What are your lessons learned regarding crisis management?