Preparing for Uncertainty: Resilience Strategies for Family Offices

By Tsitsi Mutendi : Family Governance Advisor 🔹 Multigenerational Wealth Architect 🔹 Legacy Builder

The Compass in the Storm: Guiding Family Offices Through Crisis

Picture a ship navigating a stormy sea, guided by a compass that ensures its course even as waves crash and winds howl. For family offices, global crises and uncertainties are the storm, and resilience strategies are the compass that keeps them steady.

The Hernandez family office, managing wealth across Latin America, faced this storm during the COVID-19 pandemic. Economic instability, supply chain disruptions, and political volatility tested their preparedness. However, their resilience strategies—ranging from diversification to scenario planning—enabled them to adapt and thrive.

Here are five strategies inspired by family offices like the Hernandez’s for preparing for uncertainty and building resilience.

1. Diversify to Mitigate Risks

The Hernandez family office avoided overexposure to any single asset class or region. Their portfolio included investments in technology, agriculture, healthcare, and renewable energy, ensuring stability during economic shocks.

“Diversification is not just a financial strategy; it’s a foundation for resilience.” – Guillermo Salazar, Chapter 6, Raising the Baobab.

Practical Tip: Regularly review and diversify your portfolio across industries, geographies, and asset classes to reduce risks.

2. Embrace Scenario Planning

By conducting scenario-planning exercises, the Hernandez family office simulated various crises, from natural disasters to economic recessions. These simulations helped them develop contingency plans and act swiftly when the pandemic hit.

Practical Tip: Host annual scenario-planning sessions to identify vulnerabilities and outline adaptive strategies for different potential crises.

3. Strengthen Liquidity Reserves

During the pandemic, the Hernandez family office maintained strong liquidity reserves, enabling them to seize opportunities and navigate disruptions without financial strain.

“Liquidity is the lifeline that ensures families can weather the unexpected.” – Joan Sharp, Chapter 9, Raising the Baobab.

Practical Tip: Set liquidity targets to ensure your family office can sustain operations and take advantage of opportunities during crises.

4. Leverage Technology for Agility

The Hernandez family office adopted digital tools for real-time financial tracking, risk assessment, and virtual collaboration. This technological agility allowed them to adapt quickly to changing circumstances.

Practical Tip: Invest in technology platforms that provide real-time data, enable virtual meetings, and enhance decision-making.

5. Build a Crisis-Ready Governance Framework

The Hernandez family office created a crisis committee that met regularly during turbulent times to evaluate risks and make quick decisions. This ensured clarity and alignment even in high-pressure situations.

Practical Tip: Establish a crisis governance team with clear protocols for decision-making and communication during uncertainties.

Resilience strategies are the compass that guides family offices through turbulent times. Families like the Hernandez’s demonstrate that with diversification, planning, and agility, family offices can not only withstand crises but also find opportunities for growth. For more strategies on navigating uncertainty, Raising the Baobab offers actionable tools and inspiring case studies to prepare family offices for any storm.

Tsitsi Mutendi is a renowned expert in family governance, with a strong focus on African family firms. As the co-founder of African Family Firms Expert, she has dedicated her career to advising and consulting family businesses and family offices. Tsitsi is a skilled facilitator, speaker, and author, known for her insightful contributions to the field. In 2023-24, she served as the President of the Professional Speakers Association of Southern Africa. Tsitsi is also the co-founder of Mutendi Montessori, a primary and secondary educational institution, and the founder of DanTs Smart, a technology and software development firm. With over 23 years as an entrepreneur. Tsitsi is a renowned multi-potentialite entrepreneur whose expertise has earned her recognition in leading publications such as Forbes Africa and Arise Africa, and she has been invited to speak on prestigious global stages, including the Athena40 panel. Her work can be found on www.tsitsimutendi.com, www.nhakalegacy.com, www.africanfamilyfirms.org and her trending podcast for families of wealthy and their advisors https://anchor.fm/enterprisingfamilies. You can Also get her book RAISING THE BAOBAB https://amzn.to/42cpFdL