Death of a CEO


Is your business equipped for survival?

The Death of a CEO is not something we like to think or talk about.

While we tend to associate risks with fires, floods, data breaches and hurricanes, death is the only risk guaranteed to affect us. So why isn’t it the number one priority on our risk management agenda?

When Christophe de Margerie, CEO of Total died suddenly in 2014, 2.5% was added to the value of the business immediately after news broke.

Most successful companies like Total have evolved with their own momentum. They have a depth of financial, human and geographical diversity that makes them super resilient.

Contrast Total with most owner managed SMEs, and the outcome is generally bleaker. The death of a CEO is not usually rewarded with an increase in shareholder value; quite often the business will die within months after the owner does.

To factor emergency succession into your business planning process, here are some questions to ask yourself:

  1. How can I transfer knowledge to my management team? – There is nothing to be gained from keeping it to yourself. The more information your team has about the running of your business, the better prepared they’ll be to keep it afloat
  2. Can you identify a successor? – Is there a person you would wholeheartedly trust with your business? Sit them down and ask if they would be prepared to step up if needed
  3. How can you model your cash flow? – Can your business withstand the loss of your input? How about the loss of staff focus due to dealing with your death? Will your family still need an income after your death? If your business needs cash to cover interim/permanent management costs, take a look at Key Man insurance

Visualise the scenario

How would your team react and handle the death of a CEO? Try this group exercise to find out:

  • Begin the scenario with a call from your wife to say you’ve died in a road accident on the way to the office
  • You should sit and watch in silence while your company management team diligently works through the scenario
  • Your team should be asking questions, making comments and debating the succession of the business
  • Together they should plan a clear path forwards without the CEO and discuss any mitigations needed for the survival of the business
  • Soon you’ll uncover how your team would respond now if the unexpected were to happen.

So, let me just leave you with these questions:

Is your team really prepared?

Have you tried this exercise?