Applying Risk Management Strategies to Succession Planning

April 9, 2021 | Bridging Iowa's Digital Divide Jack Carra, LMC Insurance & Risk Management, an AssuredPartners Agency,

At some point, an individual performing a critical role within your business will inevitably leave. When this happens, it’s essential to minimize the amount of time the role is vacant. Managing business succession has traditionally meant that specific individuals are identified for specific roles. Once identified, those individuals receive the appropriate training so they can step into their new roles when the time comes. But what if you approached succession as an exercise in risk mitigation—
going beyond the act of identifying and preparing individuals to take over? Called succession risk management, the aim is to ensure that inevitable vacancies in critical roles have minimal negative impact on the business. At least twice a year—and any time there are significant changes in the work, business or workforce—your company’s leadership team should discuss:

1. The work that needs to be undertaken, the types of roles critical to this work and the company, and the workforce's potential to
undertake these roles.
2. What might happen when critical roles need filling in the future (taking into account the potential of the internal workforce and external labor market).
3. What risks are likely to occur and how should they be prioritized.
4. What can be done to minimize the risk of these scenarios occurring or the impacts if they do occur. Further, it's important to reassess the risks regularly to determine
whether your mitigation strategies are still effective and appropriate. Risks stem from the misalignment of roles, skills, time, expectations and support. An important aspect of the risk management process addresses how roles are designed and what the experience is like when moving into and working in a critical role. Succession risk management is a critical component of strategic and workforce planning. Based on defined criteria and employee input, it requires an objective assessment, free from discriminatory bias. Done effectively, it ensures the business will have the future leadership, management and technical capacity it needs.