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.
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Your goal is to provide the family with a top-notch, impenetrable perimeter of safety.
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Bad actors, on the other hand, only need to be "right" once and find a gap in our risk management plans.
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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.
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Does this imply that family offices should give up and abandon all hope?
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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.
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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:
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Who are we?
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What is our mission?
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What have we lost?
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What do we have yet to lose?
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What are we missing?
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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:
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Who are we?
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Define “the family”
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Determine perspective: family member vs family office staff
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Examine external stakeholders (e.g., media, regulators, lawyers, investors, security teams, government officials, operating companies, investments, etc.)
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What is our mission?
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Determine what the family wants to achieve and what it wants to avoid
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Define the family philosophy
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Document the family office's purpose
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Understand the the values of the family and relevant stakeholders
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What have we lost?
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Establish immediate personal safety levels across the family and related family ecosystems
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Conduct immediate damage assessment
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Who? What? Why? When? Where? How?
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Determine potential privacy or reputation damage
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Phone trees and prioritization of informing key stakeholders
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Contact relevant risk management vendors
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Assign roles and responsibilities
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Coordination
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Analysis
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Response
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Communication
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Legal
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Business continuity
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What do we have yet to lose?
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Determine if the family office can be nimble in responding, while avoiding hasty decision-making
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Conduct in-depth damage assessment
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Depth of the problem
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Nature of the problem
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E.g., Financial, reputation, operations, digital or physical assets, law enforcement or regulatory agency
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What are we missing?
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Leverage external perspectives and experts
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After the event, employ lessons learned sessions to detail actions taken, what worked well, and where there are opportunities for improvement
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Final thoughts
Even if the family office has done everything possible to prepare for bad situations, sometimes bad things happen anyway.
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A crisis management framework can be a helpful tool to reduce confusion and speed up recovery time.
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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.
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What are your lessons learned regarding crisis management?