Board governance is one of the most important elements in high-growth firms. We often get a wide range of questions on managing risks in high-growth organizations. Adopting risk management best practices early in the development of an organization can put your firm on the path to accelerated growth. If done correctly, high-growth firms have the ability to continue along their successful growth path.
The issue of board governance often comes up as high-growth firms establish their risk management program. Board governance is what really keeps your business moving and growing. Therefore, you must give leadership succession a very high priority. These leaders will move your company forward or backward, depending on their skills and understanding of how your firm operates.
The best way to prepare for succession is for the board to hold several discussions every year about who the best choices for new leaders are. They need to make an effort to get to know these candidates personally and observe how they react in crisis situations. They should also create assignments that will prepare candidates for possible future roles.
Without preparation for leadership succession, board members and investors may find they lack confidence in their inside choices. In such cases, many companies will tend to fall back on outside hires. This isn’t always a good approach, because while the new hires may look good on paper, they often lack the inside knowledge of your company that is necessary for making a smooth and long-term transition. Boards should instead hold leadership succession planning meetings to keep track of candidates and their progress in gaining the needed experiences that will prepare them for their new positions.
High-growth firms should include board governance and leadership succession in their risk management planning. These long-term goals can help prevent potential serious losses resulting from a disruptive transition in leadership. For more tips and strategies on risk management planning for high growth firms, please contact one of our TechAssure Association members today.
The global financial crisis has led to dramatic and ongoing changes in risk management among many technology and life science firms. As a result, most technology and life sciences business leaders face unprecedented challenges as they grow their firms from the early stage to maturity. However, we continue to witness the growing list of high-growth firms in this category and we believe they have unique insurance and risk management needs. These firms must make risk management central to their business at an earlier stage in the corporate life cycle in order to have the best chance for survival.
Rapid-growth companies aren’t afraid of taking calculated risks. They often learn how to turn risk into opportunity and find themselves doing that better than their competition. This means that before they jump into opportunities, they calculate the risks and are more aware of the potential consequences. Developing a corporate risk management approach at an earlier stage in the firm’s life cycle is crucial for ensuring the continued interest of investors and strategic partners.
A growth firm is recognized by its ability to increase its business by a significant amount very quickly, but it’s important to realize that there are challenges with such a fast increase in business. Demands for capital to increase and expand production, hire additional workers, increase locations and more are necessary to maintain high growth rates. Investors are usually asked to take a new look at a growth business and the potential it has for increased profits and cash flow.
A growth firm will experience increased market share and profits. It puts them in the position of decreasing competition. They will be able to better seek out the latest ideas and innovations in their industry. One important result is that higher skilled workers will want to be a part of a growth firm.
As a growth firm enlarges, its insurance needs will also tend to increase. It will be important to adjust insurance coverage as is necessary. Additional insurance products may be needed and adequate liability insurance needs to be in place as the company changes and grows.
Growth firms do many things to maintain their momentum. Having a risk management plan that changes with your organization is important. Contact a TechAssure Association member to learn about our special services for high growth firms.