Risk Management V2

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What keeps you up at night? How do I manage my business risk?

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  • Slide #1 What keeps you up at night?
  • Risk Management V2

    1. 1. Business Risk What Keeps You Up at Night? A Risk Management Seminar for Business Owners Patrick A. Haake Northwestern Mutual Financial Network Northwestern Mutual Life Insurance Company Milwaukee, WI
    2. 2. Am I taking good enough care of my employees? Some of my competitors are beefing up their benefits package. What if one of my top guns decides to leave? Losing a key employee could send me back to square one. 9:42 pm
    3. 3. Outsourcing the design of our new product line makes economic sense. But what if the quality isn’t up to snuff? The last thing I need is a lawsuit from some unhappy customer. 12:59 am
    4. 4. I could use some time off. But if I can just take my business to the next level, I’ll be able to relax – maybe even steal a whole week away with my family. In the meantime, what if something happens and I can’t work? How will I meet the payroll? The rent? My other expenses? 3:31 am
    5. 5. There has to be an easier way to protect my business… my employees… my family… my future.
    6. 6. Purpose <ul><li>Get acquainted with other business owners </li></ul><ul><li>Address some of the business risks that keep you up at night. </li></ul>
    7. 7. <ul><li>Identify and prioritize goals and concerns. </li></ul><ul><li>Understand risk management strategies. </li></ul><ul><li>Access to a complimentary follow-up consultation. </li></ul>Take-aways for YOU
    8. 8. I want your feedback, too… <ul><li>Speaker and workshop evaluation </li></ul><ul><li>Complimentary consultation offer </li></ul><ul><li>Let’s begin… </li></ul>
    9. 9. An Integrated Approach You shouldn’t accept a “one-size-fits-all” approach. Business Owner Estate and Business Succession Planning Personal Planning Business Planning Employee Benefits Risk management
    10. 10. Without a strategy for managing risk, a lifetime of work and dreams can be lost in a flash. Getting a Handle on Risk
    11. 11. True or False? Some of the biggest risks to your business are the ones that are less obvious.
    12. 12. Protecting Your Whole Business You have more to protect than you may think.
    13. 13. Planning for the Unexpected Consider transferring a risk when the dollar value of your potential losses are more than you can comfortably bear. When it comes to protecting your business you have two choices: <ul><li>You can retain the risks </li></ul><ul><li>or </li></ul><ul><li>You can transfer them </li></ul>
    14. 14. Two Ways to Protect Your Business Ask yourself: Is self funding worth the financial risk? ? Self insuring a risk or Assigning it to an insurance company
    15. 15. A Proactive Approach to Risk Management Pays Source: The University of Southern California’s Marshall School of Business as described in The Proactive Position: Business Vision, Fall 2007. A sound risk management strategy can increase your business’s chances of success. Companies proactively managing risk Companies reactive in managing risk Return on assets Business lifespan Incidence of “trouble events” 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
    16. 16. Risk Management – The Facts Are you protecting your most valuable assets? <ul><li>84% of businesses own property/casualty, almost all of which is business liability </li></ul><ul><li>23% of businesses carry individual business life insurance on a key employee </li></ul><ul><li>8% of businesses carry disability coverage on a key employee </li></ul><ul><li>4% of businesses have disability overhead coverage </li></ul>
    17. 17. Covering Your Bases Liability insurance can protect your ability to do business. Business Liability Insurance Property Insurance
    18. 18. Business Liability Insurance Key Person Coverage Property Insurance Covering Your Bases Key Person Coverage can help you protect your human capital.
    19. 19. Which is the Greater Risk? Odds of Long-Term Disability vs. Death 2.7 to 1 2.8 to 1 S & P 500 Treasury Bills 3.5 to 1 3.3 to 1 Disabilities Deaths 2.2 to 1 Source: Disability Insurance Resource Center Your chances of becoming disabled are greater than you may think. 37 27 42 47 52 Age
    20. 20. Claims Approved 2004-2006 75% of disabilities are caused by illness. By Medical Cause of Disability* *Number of claims approved by a cause of disability as a percentage of the total number of claims approved for the period 2004-2006 with Northwestern Mutual. Infectious Diseases 2% Malignant Tumors 17% Mental Disorders/ Substance Abuse 12% Nervous System 10% Heart/Circulatory 9% Digestive System 2% Musculoskeletal 35% Injuries Excluding Musculoskeletal 3% Other 10%
    21. 21. A Lifeline for Your Business Key person insurance is purchased by your business for your business <ul><li>Key Person Insurance can help you: </li></ul><ul><li>Provide a tax-deductible benefit to the key employee’s family; </li></ul><ul><li>Replace lost profits and overhead; </li></ul><ul><li>Recruit, hire and train a replacement for a lost key employee; and </li></ul><ul><li>Assure customers and creditors of business continuity. </li></ul>
    22. 22. Covering Your Bases Business Overhead Protection can be a financial lifeline in times of uncertainty or crisis. Business Liability Insurance Key Person Coverage Business Overhead Protection Property Insurance
    23. 23. Evolving to Meet Your Changing Business Needs Your risk management strategy should have the flexibility to grow along with your business. startup growth maturity transfer risk management Protect against business liability Protect business from loss of owners or key employees employee benefits business succession personal planning Expanded protection against loss of owners and key employees Expanded protection against loss of owners and key employees Review/transfer protection plans Group medical plan* Group life insurance* Group disability Group benefits Basic retirement plans Selective retirement and benefit programs Employee benefit communication programs Selective disability protection Long-term care insurance Selective retirement/ benefit programs Review/transfer protection plans • Group Disability • Group Dental* • Additional group benefits • Voluntary group products Buy-sell agreement Review buy-sell agreement Exit strategy Protect income stream Protect family Retirement plan Review personal needs for owners Review personal needs for owners Estate planning Review personal plans for owners Review estate plans
    24. 24. An Integrated Approach for You and Your Business You and your business deserve a personalized approach. <ul><li>Estate needs </li></ul><ul><li>Trust Services </li></ul><ul><li>Liquidity planning </li></ul><ul><li>Exit strategies </li></ul><ul><li>Group employee benefits </li></ul><ul><li>Retirement solutions </li></ul><ul><li>Benefits for select employees </li></ul><ul><li>Employer-sponsored benefits </li></ul><ul><li>Liability coverage </li></ul><ul><li>Protect business from loss of owners or key employees </li></ul><ul><li>Retirement income </li></ul><ul><li>Education funding </li></ul><ul><li>Asset and income protection </li></ul><ul><li>Investment services </li></ul>Business Owner Estate and Business Succession Planning Personal Planning Business Planning Employee Benefits Risk management
    25. 25. The Role of an Advisor – The Facts Do you have an advisor who understands your needs? <ul><li>Business Owners tend to seek advice of professionals </li></ul><ul><ul><li>- 66% prefer one advisor for both personal and business needs </li></ul></ul><ul><ul><li>48% have a Primary Financial Advisor </li></ul></ul><ul><li>Top three advisors: </li></ul><ul><ul><li>- Accountant </li></ul></ul><ul><ul><li>- Financial Representative </li></ul></ul><ul><ul><li>- Lawyer </li></ul></ul>
    26. 26. <ul><li>Ask friends, business associates or financial professionals </li></ul><ul><li>Does the advisor understand your business? </li></ul><ul><li>Does the advisor ask questions or just make assumptions? </li></ul><ul><li>Can the advisor provide you with personal and business advice? </li></ul><ul><li>Does the advisor have access to other specialized advisors? </li></ul>Finding an Advisor Look for an advisor who can bring together all the expertise you need.
    27. 27. Behind Every Great Professional is a Network of Specialists It takes teamwork to answer your business planning needs.
    28. 28. <ul><li>The Northwestern Mutual Financial Network </li></ul><ul><li>One stop power house of expert guidance </li></ul><ul><li>Collaborating with your CPA, Attorney, banker and others </li></ul>Expert Guidance You have access to a network of financial specialists to meet your unique needs.
    29. 29. <ul><li>What risk concerns keep you up at night? </li></ul><ul><li>Are you protecting your physical, people and business assets? </li></ul><ul><li>Do you have a strategy that can grow along with your business? </li></ul><ul><li>Do you have access to a knowledgeable, trusted advisor? </li></ul>Let’s Review No time like NOW to begin the review process and get the help you need, so……You can sleep better at night.
    30. 30. I Want Your Feedback Lastly, Thank you and sleep tight!
    31. 31. For the first time in a long time, I feel confident about the future. I know what I need to do to protect my family and my business. And I know where to go to get the support I need. Bring on the competition. I’m ready to win! 6:15 am
    32. 32. <ul><li>The Northwestern Mutual Financial Network TM is a marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, its affiliates and subsidiaries. The products and services referenced are offered and sold only by appropriately appointed and licensed entities and Financial Representatives. Each Financial Representative is a licensed insurance agent and represents one or more, but not necessarily all, of the entities shown. </li></ul><ul><li>The Northwestern Mutual Life Insurance Company (Northwestern Mutual), Milwaukee, WI (life insurance, disability insurance and annuities) is neither a registered investment advisor nor a registered broker-dealer. </li></ul><ul><li>Strategic Employee Benefit Services TM is a nationwide group marketing program providing specialized services in the employee benefit arena exclusively through the Northwestern Mutual Financial Network TM . </li></ul><ul><li>Securities are offered through Northwestern Mutual Investment Services, LLC, member NASD and SIPC. 1-866-664-7737. </li></ul><ul><li>Russell Investment Group is a registered trade name of Frank Russell Company, a Washington USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of Northwestern Mutual. </li></ul><ul><li>Northwestern Mutual Wealth Management Company, Milwaukee, WI, a wholly-owned company of The Northwestern Mutual Life Insurance Company, is a limited purpose federal savings bank and registered investment adviser. </li></ul><ul><li>Long-term care insurance is offered through Northwestern Long Term Care Insurance Company, a subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, WI. This policy is intended to be a tax-qualified long-term care contract. This material is produced for the marketing and solicitation of insurance. </li></ul><ul><li>The Todd Organization is the marketing name for Todd Consulting, Inc., which is affiliated with Northwestern Mutual, and provides and administers executive benefit plans. </li></ul><ul><li>Mutual funds are offered and sold by prospectus only. You should carefully consider the investment objectives, risks, expenses and charges of the investment company before you invest. Your Northwestern Mutual Investment Services Registered Representative can provide you with a contract and fund prospectus that will contain the information noted above, and other important information that you should read carefully before you invest or send money. </li></ul>Disclosures

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