Advisors to multigenerational families may be well aware of the ever-more diverse risks posed by today’s world. Many of these risks, ranging from personal liability to cyber exposure to the protection of valuable collections, can have significant financial consequences if not properly insured or managed. As a family grows by generations and complexity, so, too, do the intricacies of safeguarding its assets through appropriate insurance coverage, risk management strategies, and protective measures.
Some vulnerabilities, however, deserve more attention than they often receive. The following four risk areas should receive closer review annually:
- Liability related to roles and responsibilities: Affluent multigenerational families are likely to serve as directors, officers, and trustees; others are being groomed for such roles. Yet many of them are not sufficiently informed about the potential personal liability. Annually reviewing non-profit board roles can also clarify which insurance is in place to protect personal liability. A similar review is beneficial for all Trustee roles.
- The younger generations’ relationship to risk: One useful tool for bolstering long-term risk resilience is a process for educating younger members about risk management. Just as they benefit from learning financial literacy and safe driving practices, teens and young adults would benefit from risk planning. They may expose themselves to risk by participating in even mundane activities—such as posting on social media, driving, joining fraternities, hosting parties, and the like. Life-stage events such as owning one’s first phone or car, moving to college, or purchasing a home can serve as opportunities to discuss the responsibilities and relevancies of each to the well-being of the broader family. These events also provide opportunities to further involve the younger generation in the family risk-planning process as their position in the hierarchy continues to increase.
- Social media and cyber exposures: Young family members are not the only ones interacting on social media and other public platforms, and anyone who does is at risk of the consequences of negative exposure or of attracting scammers and other cyber criminals. Every family member, then, can benefit from lessons in safe usage. Consulting with cybersecurity experts ensures that all security measures are being taken wherever they matter, from installing cameras to monitor your property to password-protecting Wi-Fi networks and online accounts. An important note: Families need not be in the public eye to be a target of threats and lawsuits.
- Collections: While it’s wonderful to collect art, wine, jewelry, and other collectibles, it’s frankly less fun to manage the related risk. However, it is crucial to protect these investments. By adopting a more systematic approach to managing potential losses, important tasks such as appraisals, scheduling new acquisitions, and ensuring proper coverage are more easily accomplished.
Given the success of your family, you have no doubt already navigated your family’s holdings through a multitude of risks and challenges. By raising awareness of these increasingly common concerns, you will only further strengthen your family’s risk resilience.
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