business continuity plan family office
Understanding business continuity plans for family offices
Operations
Updated on November 22, 2023

Table of Contents

  1. What is a business continuity plan?
  2. Unique challenges of family offices
  3. Tailored business continuity planning approach
  4. Key components to a business continuity plan
  5. Collaboration and implementation
  6. Monitoring and improvements

The pandemic, war between Russia and Ukraine, and economic downturn have prompted many businesses to strengthen their risk management strategies. Preparing for the worst makes it easier to recover from a disaster quickly. This guide highlights the importance of having a comprehensive business continuity plan for family offices to ensure uninterrupted operations and safeguard wealth.

What is a business continuity plan?

A business continuity plan is a set of procedures and strategies created to keep a company running during and after a disaster. It covers all aspects of the business that can be impacted, including business processes, assets, human resources, and business partners. The plan ensures that employees and assets are safe and the company resumes normal business operations as quickly as possible.

For example, in the event of a fire on the office premises that causes property damage, a standard plan would involve relocating employees to alternate workspaces or allowing them to work from home. Any damaged furniture or equipment would need replacing. If any software were affected, they would need to reboot and reinstall it promptly to ensure the smooth continuation of the business’s day-to-day operations.

Key components of an effective business continuity plan:

A continuity plan must consider many elements because each business differs depending on size and complexity. But a good business continuity plan has the following key components:

Risk assessment: The first step in any continuity plan is identifying potential risks and threats that may cause disruptions. That could include natural disasters, fires, cyber-attacks or economic downturns. The point is to be aware of all the potential risks so that you can prepare a plan for mitigating them, should they occur.

Business impact analysis: During an emergency, maintaining all operations may not be possible. A business impact analysis helps to determine which activities should continue to function during the emergency until normal business operations can resume. For instance, profit-generating activities may take priority over team-building exercises.

Recovery strategies: In an emergency, it’s essential to have clear procedures in place. These procedures may involve relocating to a different site, using backup systems, or working with third-party service providers. For instance, a disaster recovery plan (DRP) can help protect data and restore information technology (IT) infrastructure access.

Plan development: During emergencies, the last thing you want to do is think on your feet. That’s why it’s essential to document the business continuity plan in writing (see example here). This document should detail all potential risks to the company and the steps and protocols to take in response. It should also cover crisis management and how to recover critical business processes.

Testing and training: For a business continuity plan to be effective in emergencies, it must be tested. Ensuring that all employees are trained on their roles and responsibilities during disruptions is important. Regular training and drill exercises can test the effectiveness and improve preparedness.

Unique challenges of family offices

Just like regular businesses, family offices face various risks and threats. The difference is that disruptions to a family office’s operation can significantly affect the family’s wealth and legacy. That’s why business continuity is often linked with succession planning.

The 2023 North America Family Business Report by Brightstar Capital Partners and Campden Wealth revealed that most family businesses (61%) do not have a written and formal succession plan. Furthermore, a recent study showed that family offices are not adequately stress-testing for potential threats.  This lack of preparedness is often due to a shortage of internal expertise, leading to underestimating risks. Furthermore, family members are often uncomfortable with planning for disruptions, causing family offices to react to threats rather than proactively preventing them.

Tailored business continuity planning approach

Regardless of the type of family office, specific core components of the continuity plan remain essential, such as risk assessment, recovery strategies, and regular testing. However, to make the process easier, family offices should consider tailoring their continuity plans to suit their unique goals and objectives.

For example, a single-family office may prioritise wealth management, family governance and succession planning. While a multi-family office may prioritise their client’s needs and customised services. A tailored approach enhances the family office’s ability to maintain uninterrupted operations, safeguard client confidentiality and preserve wealth during distressful times.

Collaboration and implementation

Successfully implementing a business continuity plan for family offices requires active collaboration and communication among family members, employees, and external service providers. Each group plays a crucial role in ensuring successful execution and maintaining uninterrupted operations during disruptions.

Family members must be well informed about the plan and allowed to make critical decisions on what functions to prioritise. Employees need to be trained and take responsibility for the recovery activities. And external service providers should be informed about the plan’s objectives and their roles in maintaining operations.

Coordinating the plan with all stakeholders can be exhaustive. Family offices can seek the help of consultants and external advisors to make the process smoother. Additionally, they can use technology platforms to achieve seamless collaboration and communication. Check out some examples of service providers below:

iPaladin

iPaladin is a digital family office operating system. The platform removes inefficiencies, lowers risk, improves compliance and provides a solution built specifically for managing complex single and multi-family offices.

Way2B1

Way2B1 is an integrative platform that streamlines life management for families, organisations, and the teams and professionals who support them. It helps to organise all family information in one hub, simplifying logistics and managing access to family data.

Trustworthy

Trustworthy is a Family Operating System®, an online service that helps modern families and their advisors organise, protect and optimise their important information all on one platform. It ensures a secure and collaborative experience between families and their advisors.

Eton Solutions

Eton Solutions is a comprehensive platform designed to enhance the capabilities of family offices. It provides precise data, streamlines operations, and minimises risk, allowing you to concentrate on delivering value and strengthening client relationships.

Nines

Nines is a technology platform that aids families and their private service professionals manage their households. It enables estate managers, house managers, personal assistants, nannies, housekeepers, private chefs, and property managers to work more quickly and efficiently.

Monitoring and improvements

To guarantee the success of a continuity plan, it is crucial to maintain regular monitoring and updates. It ensures that the plan can operate seamlessly during unforeseen events. Performing tests and simulation exercises help to pinpoint any flaws in the plan. Consistent drills lessen recovery time, boost employee morale, and can result in cost benefits. It’s important to note that ongoing improvements and updates should occur regularly, at least once a year, to address the evolving risks and changes in the industry.

Further Reading
A Simple guide to single family office structure
A Simple guide to single family office structure
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A Simple guide to management through data
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Most companies can agree that data analysis should be a priority, and for family offices, technology has become incredibly important, particularly for those who acknowledge the role it can play in helping them evolve and keep up with a dynamic business landscape. Here, we investigate the types of data and technology that are most helpful for family offices.

How to choose a family office advisor
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As family offices evolve and become more complex, their advisors continue to play an important support role. Here is our guide to successfully selecting the right advisor for your specific needs.

A Simple guide to asset allocation for family offices
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Asset allocation is crucial for family offices to manage their investments effectively and balance risk and reward. Our comprehensive guide on asset allocation for family offices covers key factors to consider, common strategies, and best practices.

Simple solutions for complex times.