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Stepchenkova O.S., Volkov R.K.
Corporate Hereditary Succession Risk Management
Keywords: risk management, business continuity, hereditary succession risk management, business inheritance, corporate governance, family business, business transfer strategy
The relevance of the study lies in the presence of problems related to hereditary transfer of business, especially in conditions of economic turbulence in the Russia, which, together with the loss of enterprises, can lead to the loss of accumulated knowledge and created technologies, which will put the Russian economy at a disadvantage compared to international competitors. In addition, this topic has not been sufficiently studied from the perspective of enterprise risk management. In the study, the factors of successful hereditary succession are divided into internal and external ones. External factors include a perfect regulatory framework and availability of necessary socio-economic infrastructure; internal factors include adherence to the principles of corporate governance G20/OECD, formation of a systematic approach to the transfer of the company to heirs, including development of their competencies, compliance with the legislative norms of the Russian Federation and formation of official succession plans. The purpose of the study is to develop a risk management mechanism for the hereditary succession of a corporation. Materials and methods. In the course of the research, the following methods were used: analysis of Russian and foreign scientific sources and business Internet resources, the case method, the «bow tie» risk management method (GOST R ISO/IEC 31010-2011), the scoring method based on the interpretation of scientific publications. Results. An event of hereditary succession, having a dual nature, like any risk, can affect the financial performance of the company, the image of the company in the eyes of the consumer (risks in brand management) and other aspects of the company's activities, that is why careful preparation and selection of the most favorable moment at the stage of the company's life cycle, for example, during its economic growth are necessary. The practical experience described in the article has shown that the absence of a regulated process for transferring business ownership leads to significant losses: closure of enterprises, financial damage to the company and heirs, complete loss of business, a decrease in market share, etc. An impulse mechanism for preventing the risk of hereditary succession has been identified in studying the experience of Chinese companies, which is implemented through one-time events, such as charitable donations to strengthen reputation. A systemic mechanism for preventing the risk of hereditary succession was identified from the experience of Auchan company, in which both the organizational structure and a set of measures were aimed at increasing the stability of the company in transferring business to heirs. It is proposed to introduce a hereditary succession risk management mechanism at the enterprise based on GOST R ISO/IEC 31010-2011. The use of the risk analysis method («bow tie») made it possible to systematize the causes, consequences and to offer a set of preventive (drawing up a legally formalized inheritance plan, training the heir in management skills, appointing intermediaries in conflict resolution, assessing market changes and adapting to them) and mitigating (creating a reserve fund in case of crisis situations, maintaining stable relationships with partners and clients, support for employees during the transition period, legal support) measures to prevent the risk of hereditary succession. The mechanism represents a cyclical sequence of stages aimed at continuous improvement of the risk management process during business transfer. The interdisciplinary approach at each stage is carried out with the help of a team of specialists, the contribution of each of whom is evaluated on a 10-point scale. Conclusions. The proposed mechanism can be adapted for various industries and types of family business and will help to mitigate the risks of hereditary succession, preserve the stability of enterprises and the Russian economy as a whole.
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About authors
- Stepchenkova Olga S.
- Candidate of Economics Sciences, Assistant Lecturer, International Business Department, St. Petersburg State University of Economics, Russia, St. Petersburg (ooolitmash@yandex.ru; ORCID: https://orcid.org/0000-0002-7043-6614)
- Volkov Ruslan K.
- 4th year Student, Management Faculty, St. Petersburg State University of Economics, Russia, St. Petersburg (ruslan.volkov.0303@mail.ru; ORCID: https://orcid.org/0009-0007-9377-2593)
Article link
Stepchenkova O.S., Volkov R.K. Corporate Hereditary Succession Risk Management [Electronic resource] // Oeconomia et Jus. – 2024. – №4. P. 64-78. – URL: https://oecomia-et-jus.ru/en/single/2024/4/6/. DOI: 10.47026/2499-9636-2024-4-64-78.
