Understanding Business Risks

📢 Thinking Through Policy Uncertainty: A Strategic Imperative for Business Leaders In times of great geopolitical and policy uncertainty—like the one we are witnessing today—business leaders must sharpen their ability to distinguish the signal from the noise. With shifting alliances, evolving trade policies, economic fragmentation, and security risks shaping the global landscape, how should leaders consider what matters most? Here’s where to start: 🔹 Focus on Structural vs. Cyclical Change – Not all policy shifts have the same weight. Some are fundamental shifts in global power structures, while others are short-term political maneuvering. Leaders must ask: Is this a momentary disruption or a realignment that demands a strategic pivot? 🔹 Identify the Intent vs. the Impact – Governments make bold statements, but the real question is whether they have the political will, economic leverage, and regulatory mechanisms to implement those policies effectively. Bluster does not equal execution. Distinguish rhetoric from reality. 🔹 Look Beyond Borders – Policy changes in one country often trigger ripple effects across industries, supply chains, and markets. A new trade restriction, for example, doesn’t just affect exporters; it reverberates through global pricing, logistics, and investment strategies. 🔹 Scenario Planning, Not Guesswork – No leader has a crystal ball, but those who think through multiple contingencies will be best positioned for success. What happens if tariffs rise? If economic blocs realign? If new sanctions emerge? Having a strategy for different scenarios creates agility in uncertainty. 🔹 Follow the Money & Markets – Watch how capital moves. Global investors, multinational corporations, and financial markets often react before policies take full effect. If businesses are shifting supply chains or hedging investments, that’s a sign of where the real risks and opportunities lie. 🔹 Security, Stability & Strategic Foresight – Policy uncertainty isn’t just about commerce; it has deep implications for operational risk, cybersecurity, and corporate security strategies. Leaders must assess vulnerabilities beyond the balance sheet. The Bottom Line? In this era of uncertainty, success belongs to those who don’t just react but anticipate. Those who ask the right questions. Those who embrace complexity rather than fear it. The future isn’t predetermined—but strategic leaders shape how they navigate it. What’s your approach to policy uncertainty? Let’s discuss. 👇 #Geopolitics #BusinessStrategy #PolicyUncertainty #GlobalTrade #Leadership

*** Beware of Predatory Loans: A Call to Educate and Protect Small Businesses *** Sometimes, it's simply too late. Small businesses in cash flow crises often turn to fast and easy merchant cash advance loans, unaware of the long-term consequences. Here's a real-life example: $100,000 Loan: A small B2B service provider took out a $100,000 loan. 149.95% APR: The loan came with a staggering 149.95% APR (some go up   to 300%). Daily Payments of $799: The burden of daily payments forced the business to close its doors. Key Takeaways: Educate Your Clients: Bankers, CPAs, bookkeepers, and insurance agents, please take the time to educate your clients. Alternative Financing: Explain the risks of predatory loans and introduce safer options like accounts receivable financing, which has helped countless businesses thrive. Protect Against Predatory Lenders: These lenders often prey on vulnerable businesses, pushing loans with high commissions for brokers. Don’t let your clients fall into this trap. Your guidance can make all the difference in helping small businesses avoid devastating financial decisions.

🛑 The Unspoken Reality: Navigating the 5 'D's in Business 🛑 Yes I am going there! Challenges are as certain as change itself in the life of every business. Yet, many leaders often overlook planning for the critical yet unforeseen. Let's discuss the 5 Ds—death, Disability, Divorce, Disagreement, and Distress—and their profound impact on businesses, often leaving them in turmoil and an unprepared family trying to pick up the pieces. 1. Death 💔: It's uncomfortable yet necessary to confront. The passing of a key figure can destabilize operations and leadership. The National Association of Corporate Directors found that less than 25% of private companies have a formal succession plan in place. What’s more, does the family know the plan, and who is the successor to represent the estate’s interest in the business? 2. Disability 🚑: Unexpected health issues can sideline crucial contributors, disrupting business flow. The Council for Disability Awareness notes that 1 in 4 of today's 20-year-olds will become disabled before retirement. 3. Divorce 💔: Personal life events can spill over into the business, affecting ownership, operations, and morale. The American Academy of Matrimonial Lawyers study found that businesses are involved in 62% of divorces. 4. Disagreement 🤝: Cohesion is key. When partners or leaders disagree fundamentally, it can cripple a business. I’ve seen it first hand inside clients. Harvard Business Review highlights that 65% of startups fail due to co-founder conflict.   5. Distress 😰: Economic downturns, market shifts, or sudden loss of business can lead to critical stress points. Bloomberg states that 20% of small businesses fail in their first year, a number often exacerbated by inadequate planning for distress. Each of these 'D's poses a significant risk, yet, with foresight and strategy, their impact can be mitigated. Harvard Business Review found that over 70% of businesses don’t have a solid plan for these scenarios. That’s a staggering number! 📉 🔍 Many first-generation business owners have a high-risk profile to get the business required, and as they grow, they ignore what could destroy their life’s work in short order. Risk management is not merely an option; it's a necessity. Cultivating resilience against these 5 'D's involves: Establishing a robust succession and estate plan. Insuring against disability and operational disruptions. Preparing a prenuptial or buy-sell agreement in partnership scenarios. Encouraging open, constructive dialogue among leaders. Maintaining a healthy emergency fund and diversifying income streams. It's about transforming potential vulnerabilities into strengths, ensuring your business survives and thrives, irrespective of its challenges. 👥 Have you identified any of the 5 'D's as potential risks within your own business? What steps have you taken to safeguard your enterprise against them? Let's discuss below 👇.

🌎 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆: 𝗧𝗵𝗲 𝟮𝟬𝟮𝟱 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗕𝗼𝗮𝗿𝗱 𝗔𝗴𝗲𝗻𝗱𝗮🚀 Uncertainty isn’t new—but 2025 is bringing a whole new level of complexity. With shifting trade policies, regulatory changes, AI disruptions, and talent challenges, corporate boards must act as steady beacons in turbulent times. 🔹 𝗚𝗲𝗼𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗔𝗴𝗶𝗹𝗶𝘁𝘆: Trade wars? Supply chain disruptions? Boards must diversify & scenario plan now. 🔹 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗪𝗵𝗶𝗽𝗹𝗮𝘀𝗵: Business-friendly antitrust shifts, potential rollbacks on environmental regulations, The Chevron doctrine overturned —are you ready? 🔹 𝗔𝗜 & 𝗘𝘁𝗵𝗶𝗰𝘀: Innovation vs. risk—how can boards ensure responsible AI adoption? 🔹 𝗧𝗮𝗹𝗲𝗻𝘁 & 𝗪𝗼𝗿𝗸𝗳𝗼𝗿𝗰𝗲 𝗧𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: Immigration shifts + reskilling needs = A board-level priority. 🔹 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆: Policy shifts don’t change investor & consumer expectations. 🔹 𝗘𝗻𝘁𝗲𝗿𝗽𝗿𝗶𝘀𝗲 𝗥𝗶𝘀𝗸 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: Dynamic risks require dynamic board oversight. 🔹 𝗕𝗼𝗮𝗿𝗱 𝗖𝗼𝗺𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻 & 𝗚𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲: Diverse expertise = better decision-making in uncertain times. 📌 How should boards prepare for 2025? I break it all down in my latest article. Check it out and let me know your thoughts!👇 #BoardLeadership #CorporateGovernance #AI #Geopolitics #RiskManagement #BusinessStrategy #FutureOfWork #RigorRelevanceImpact SMU Cox School of Business #NACD

Have you ever heard statistics about worrying? A 2021 Cornell University study showed that 85% of what we worry about will never come to pass. In the business world, worrying about whether a gamble will pay off or if the efforts of a certain project will yield expected results comes down to that all too elusive concept: risk tolerance. But how do we know when risks are REAL versus PERCEIVED? When talking with candidates who are interested in franchise ownership, we often discuss the risks below. PERCEIVED Risks: ❌ 1. There is too much competition. 🔊Response: For everyday essential services, a national platform can deliver superior tech stack and customer experience vs. local competitors. Execution risk is the real concern (see below). 2. It is hard to find/manage employees (or I will have to pay too much) 🔊Response: Good employees are everywhere. You need to pay market prices, but nothing more. Having a compelling culture and no red tape is very appealing to many hourly employees versus a big brother type corporation. 3. What happens in the case of a recession? 🔊Response: Recessions are the best time to launch a business and begin ramping up, so you’re hitting stride as the economy rebounds. It always cycles. Plus costs, labor and rent are typically all better and cheaper. 4. General fear of failure. 🔊Response: This is mindset - scarcity vs. abundance. Validate with franchisees in any system and get the real answers rather than conjecture. FEAR = False Evidence Appearing Real. 5. I’ll have to work too many hours/I’ll have no freedom. 🔊Response: You are the boss and can dictate how you want to run your business. You already have a good work ethic if you’re starting a business. Invariably, owning a business increases quality of life. REAL Risks: ✅ 1. Execution Risk: 🎯Ultimately, it’s up to you to build your business and overcome obstacles rather than give up. This is the most important and real risk, yet most candidates often don’t consider this. 2. Macro Risk: 📊The economy, Covid, etc. are things you can’t control, but also impact every other business owner in America. Just plan for your contingencies. Keep your goals static, but your methods flexible. 3. Location Risk:📍If you’re going into a brick-and-mortar model, this can be a factor. Take extra care in your site selection and trust a combination of franchisor criteria, local broker knowledge, plus your intuitive knowledge of the market. 4. Liquidity Risk:💰One of the most common causes of failures isn’t the business model, but lack of working capital to get the business stabilized. To discuss how REAL vs PERCEIVED risks factor into your franchise future, call or DM. #success #motivation #entrepreneurship  _________________________ → Follow & ring the 🔔for more franchise/business ownership tips & insight

A student asked: “What do you think about this deal? A Tennessee-based plastic surgeon is selling 90% of his practice for $6M. He’s willing to extend a significant note to the buyer, with the condition that he keeps access to the surgery facility. He makes $1M a year and has a medical spa next door.” Here’s the problem: this is a classic key man risk deal. The entire value of the business is tied to the surgeon. When he leaves—or worse, stops operating—so does the cash flow. There’s no inventory of ready-to-go plastic surgeons to replace him, making this high-risk. Even with a note and the spa next door, this deal hinges on one person. If that person steps away, the $6M investment turns into a liability. If you can’t replace the talent or create a transition plan that de-risks the business, you might want to keep your $6M in your pocket. Key takeaway: Never let the business walk out the door with the seller.

Up to 60% of rebrands fail. The usual cause? Chasing a new look without a real plan. I’ve studied over 200+ rebrand case studies. The winners share four traits. The failures? They almost always prioritized aesthetics over strategy. 1. Strategy before beauty Three out of four consumers remember brands by their logo. That’s why most failed rebrands start there and end there. The successful ones invest months building a strategic foundation before touching design. 2. Voice that connects Brand voice isn’t just copy. It’s your personality across every channel. Nike doesn’t just sell shoes. Their voice is empowering, motivational, slightly rebellious, and it’s consistent everywhere. Harry’s and Dollar Shave Club both sell razors. Harry’s uses refined sophistication for premium buyers. Dollar Shave Club leans into irreverent humor for cost-conscious millennials. Same product category, opposite voices. Voice comes from knowing your audience, not guessing. 3. Visual identity with purpose Visuals work only after strategy and voice are clear. Tropicana learned this in 2009. They replaced recognizable packaging with a clean, minimal design. Customers didn’t recognize it. Sales fell 20% in six weeks. Royal Mail made the same mistake in 2001. They ditched 500 years of equity for a meaningless name: Consignia. The public mocked it. Within 15 months, they reverted, wasting millions. Visual identity should strengthen your strategy, not erase your history. 4. Live the change internally first If your team doesn’t believe in the rebrand, it will never take flight. Every employee must understand and live the new direction before the public sees it. McKinsey found that change programs with strong employee buy-in are 30% more likely to succeed. Internal alignment before external launch, always. Ignore this, and you won’t just waste money. You’ll destroy trust. LESSON: A rebrand isn’t about looking different. Kia proved it in 2021. They didn’t just tweak a logo. They redefined their purpose: “Movement that Inspires” and backed it with product innovation. Revenue jumped 18% to a record $60 billion. Kia invested in transformation, not cosmetics, and hit historic growth. In an example of what not to do, Gap launched a new logo on October 6, 2010. By October 12 - just 6 days later - they reversed it. Cost: $100 million down the drain. A new look only works if it’s built on a strong foundation. When you’re clear on why your brand exists and what it stands for, the visuals have power. They signal meaning people can feel. Get the meaning right, and the look will matter. Motto®

The largest copyright settlement in U.S. history wasn’t about music or movies. It was about AI training data. Anthropic will pay $1.5 billion and destroy datasets sourced from Library Genesis and Pirate Library Mirror. That number isn’t just a penalty. It is a warning label for every enterprise buyer of LLMs. What CIOs, CTOs, and GCs need to know: 1. Dataset provenance is now a board-level risk. The court drew a bright line: purchased-and-scanned books may qualify as fair use, but pirated books are “irredeemably infringing.” If your vendor cannot show data lineage, you are buying litigation risk. 2. Past and future liability are different. Anthropic only secured a release for past training. Any outputs from Claude, and any future ingestion of copyrighted material, remain open to lawsuits. If you deploy an LLM, ask how liability for outputs is handled in contracts. 3. There is no blanket amnesty. The release applies only to a defined list of about 500,000 works. Everything else remains actionable. Enterprises should not assume one settlement protects them from the next. 4. AI costs are about to change. Three thousand dollars per book became the reference price for copyrighted works in training datasets. That is far above statutory minimum damages. Expect higher licensing costs to be built into the price of frontier models. 5. Governance must extend to AI supply chains. Just as enterprises built third-party risk programs for cloud and SaaS, they will now need AI governance frameworks: • Data provenance checks in procurement • Output indemnities in vendor contracts • Ongoing monitoring for infringement claims Bottom line for buyers: The age of “scrape first, ask later” is over. Enterprises that treat AI adoption as a procurement and governance problem, not just a technology problem, will be the ones who stay protected while others are dragged into court.

Glen Palmer, PSP, CFCC, FAACE and I are honored by AACE publishing another of our Top Ten series of papers in the Cost Engineering Journal. Resource management sits at the heart of project success—and, too often, at the root of costly construction claims. Why Focus on Resources? Most construction schedules are built on assumptions about production rates, durations, and quantities. But when resource planning falls short—whether due to unrealistic manpower peaks, lack of skilled labor, or poor coordination—projects risk delays, cost overruns, and disputes. Rather than waiting for claims to arise, Palmer and Carson argue for a proactive approach: plan, validate, and monitor your resources from day one. Key Takeaways from the Top Ten Approaches: 1. Validate Resources by Discipline: Go beyond surface-level schedule checks. Detailed resource validation—using field-experienced personnel—can identify unrealistic resource peaks and prevent unachievable schedules. 2. Formalize Punch and Warranty List Management: Avoid never-ending completion and warranty periods by developing comprehensive, early punch lists and using structured warranty management systems. 3. Check Resource Earning Curves: Ensure planned progress is actually achievable by comparing planned manpower curves and production rates to real-world constraints. 4. Manage Schedule Compression: When compressing schedules, understand the risks and costs of acceleration and recovery. Use structured analysis and documentation to avoid disputes. 5. Review General Conditions Labor: Monitor and budget field overhead costs carefully, and avoid relying on variable, hard-to-track level-of-effort activities. 6. Use Constructability Reviews: Always have experienced field experts review “fast-tracked” project schedules to spot resource and constructability problems early. 7. Address Trade Stacking and Overcrowding: Analyze crew concurrency and area usage to prevent inefficiencies from too many workers or trades in the same space. 8. Specify Resource Requirements in Schedules: Include resource histograms and percent curves in scheduling specifications to enable thorough schedule reviews. 9. Plan for Resource Availability: Evaluate the availability of skilled labor and specialty resources, especially on large or geographically constrained projects. 10. Minimize Inefficiencies from Disrupted Trade Work: Align procurement, sequencing, and trade starts to reduce disruption, and use targeted planning to ensure work is completed efficiently on the first attempt. Conclusion: Resource-related claims are often avoidable with disciplined planning, honest schedule validation, and ongoing monitoring. By following these ten approaches, project teams can dramatically reduce the risk of disputes, keep projects on track, and protect both profit and reputation.

The AI Copyright Reckoning: What Disney's Lawsuit Means for Your Business The entertainment industry just fired its biggest shot yet in the AI copyright wars. The Walt Disney Company and NBCUniversal have teamed up to sue Midjourney, marking the first time major Hollywood studios have taken legal action against a generative AI company. Combined with Getty Images' copyright lawsuit against Stability AI that began at London's High Court this week, we're witnessing a critical moment that will reshape how AI companies operate. The Disney-NBCUniversal lawsuit claims Midjourney pirated their libraries to generate "endless unauthorized copies" of characters like Darth Vader and the Minions. Getty Images accuses Stability AI of misusing over 12 million Getty photos to train its Stable Diffusion system. Both cases represent a clear escalation from individual artist lawsuits to major corporate copyright holders taking direct action. AI companies argue they're operating within existing legal frameworks and that overly broad copyright interpretations could stifle innovation. They contend their systems learn patterns to create new, original works rather than storing exact copies. However, courts are showing increased willingness to let these cases proceed, with one California judge recently indicating he was inclined to green-light a copyright lawsuit against multiple AI companies. These disputes have the potential to reshape copyright licensing in the AI age and create new legal frameworks that could materially impact AI development costs and market access. We're likely to see increased demand for properly licensed training data, creating new revenue streams for content creators but higher barriers for AI companies. For businesses, the message is clear--the Wild West era of AI training data is ending. Companies using AI tools should audit their current usage and understand the training data sources behind their systems. Those developing AI systems must invest in proper data licensing rather than relying solely on scraped internet data. The cost of licensing may be less than the potential liability from copyright infringement claims. Companies that adapt by building proper licensing relationships and respecting intellectual property rights will be best positioned for long-term success, while those that ignore these developments do so at their own peril. What steps is your organization taking to navigate AI copyright challenges?