Sometimes surprising news turns out to be a lot more ordinary than it first appears. An insurance statistic popped up recently that seemed really surprising at first. According to Forbes Insight, 36% of banking and financial executives said they don’t have a clear understanding of how to mitigate risks to their business. Considering the damage that certain risks can do to a business, that really is an amazing statistic. At least it was, until I started to think about it.
Executives And Risk
These statistics illustrate that executives are willing to assume that their organization has a handle on risk, even if they don’t fully understand the process. That may be a dangerous assumption, but it is not a unique one. In fact, it’s the kind of assumption we’ve seen many insurance agency owners make. We’ve also seen a few of those pay for the mistake.
Obviously, insurance agency owners are good at focusing on risk. As an owner, you probably found those stats pretty shocking. What if we changed the question a little? What if we tried to find the percentage of insurance agency owners who don’t understand how they are going to perpetuate their business? I’d wager the percentage would be a lot higher than 36%.
Agency Owners And Perpetuation Planning
In our experience, agency owners make the same assumption that the execs mentioned. They assume they will be able to deal with the perpetuation when the time comes, so they don’t think about it for now. That assumption also creates the same risks. If you don’t have a perpetuation plan, you’re putting the business at risk.
If the worst were to happen and the business had to be sold in a hurry, or someone had to step in to take your place, how would that work? With no plan in place, a contingency would have to be put together at short notice. That might mean selling the business for a fraction of its potential value or perpetuation to someone not ideally suited to the role. Aside from the financial impact, your legacy was ruined because you assumed you had plenty of time.
A Word Of Advice From….
This is usually the portion of the blog where I would offer advice on what you should do to prevent that scenario. In this case, I don’t need to. Just think about the executives I mentioned. What advice would you give them about risk management? Would you encourage them to engage with the risk management process and learn about loss prevention?
You don’t need me to tell you that you need to start planning for the future now. Just follow your own advice.
