Risk Management V2

Business RiskBusiness Risk

What Keeps You Up at Night?A Risk Management Seminar

for Business Owners

Patrick A. HaakeNorthwestern Mutual Financial Network

Northwestern Mutual Life Insurance CompanyMilwaukee, WI

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

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

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

There has to be an easier way to protect my business…my employees…my family…my future.

PurposePurpose

• Get acquainted with other business owners

• Address some of the business risks that keep you up at night.

• Identify and prioritize goals and concerns.

• Understand risk management strategies.

• Access to a complimentary follow-up consultation.

Take-aways for YOUTake-aways for YOU

I want your feedback, too…I want your feedback, too…

• Speaker and workshop evaluation

• Complimentary consultation offer

Let’s begin…

An Integrated ApproachAn Integrated Approach

You shouldn’t accept a “one-size-fits-all” approach.You shouldn’t accept a “one-size-fits-all” approach.

BusinessOwner

Estate andBusinessSuccessionPlanning

PersonalPlanning

Business Planning

Employee Benefits Risk management

Without a strategy for managing risk, a lifetime of work and dreams can be lost in a flash.

Without a strategy for managing risk, a lifetime of work and dreams can be lost in a flash.

Getting a Handle on RiskGetting a Handle on Risk

True or False?True or False?

Some of the biggest risks to your business are the ones that are less obvious.Some of the biggest risks to your business are the ones that are less obvious.

Protecting Your Whole BusinessProtecting Your Whole Business

You have more to protect than you may think.You have more to protect than you may think.

Planning for the UnexpectedPlanning for the Unexpected

Consider transferring a risk when the dollar value of your potential losses are more than you can comfortably bear.

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:

• You can retain the risks or• You can transfer them

Two Ways to Protect Your BusinessTwo Ways to Protect Your Business

Ask yourself: Is self funding worth the financial risk?Ask yourself: Is self funding worth the financial risk?

?

Self insuring a riskor

Assigning it to an insurance company

A Proactive Approach to Risk Management PaysA Proactive Approach to Risk Management Pays

Source: The University of Southern California’s MarshallSchool 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.

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%

Risk Management – The FactsRisk Management – The Facts

Are you protecting your most valuable assets?Are you protecting your most valuable assets?

• 84% of businesses own property/casualty, almost all of which is business liability

• 23% of businesses carry individual business life insurance on a key employee

• 8% of businesses carry disability coverage on a key employee

• 4% of businesses have disability overhead coverage

Covering Your BasesCovering Your Bases

Liability insurance can protect your ability to do business.Liability insurance can protect your ability to do business.

Business LiabilityInsurance

PropertyInsurance


Key PersonCoverage

PropertyInsurance


Key Person Coverage can help you protect your human capital.Key Person Coverage can help you protect your human capital.

Which is the Greater Risk?Which is the Greater Risk?

Odds of Long-Term Disability vs. Death

2.7 to 12.8 to 1

S & P 500

Treasury Bills

3.5 to 1

3.3 to 1Disabilities

Deaths

2.2 to 1

Source: Disability Insurance Resource Center

Your chances of becoming disabled are greater than you may think.Your chances of becoming disabled are greater than you may think.

3727 42 47 52

Age

Claims Approved 2004-2006Claims Approved 2004-2006

75% of disabilities are caused by illness.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 Diseases2%

Malignant Tumors17%

Mental Disorders/Substance Abuse

12%

Nervous System10%

Heart/Circulatory9%

Digestive System2%

Musculoskeletal35%

Injuries ExcludingMusculoskeletal

3%

Other10%

A Lifeline for Your BusinessA Lifeline for Your Business

Key person insurance is purchased by your business for your businessKey person insurance is purchased by your business for your business

Key Person Insurance can help you:

• Provide a tax-deductible benefit to the key employee’s family;

• Replace lost profits and overhead;

• Recruit, hire and train a replacement for a lost key employee; and

• Assure customers and creditors of business continuity.


Business Overhead Protection can be a financial lifeline in times of uncertainty or crisis.

Business Overhead Protection can be a financial lifeline in times of uncertainty or crisis.


Key PersonCoverage

Business OverheadProtection

PropertyInsurance

Evolving to Meet Your Changing Business NeedsEvolving to Meet Your Changing Business Needs

Your risk management strategy should have the flexibility to grow along with your business.

Your risk management strategy should have the flexibility to grow along with your business.

startup growth maturity transfer

riskmanagement

Protect against business liability

Protect business from loss of owners or key employees

employeebenefits

businesssuccession

personalplanning

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

An Integrated Approach for You and Your BusinessAn Integrated Approach for You and Your Business

You and your business deserve a personalized approach.You and your business deserve a personalized approach.

BusinessOwner

Estate andBusinessSuccessionPlanning

PersonalPlanning

Business Planning

Employee Benefits Risk management

• Estate needs• Trust Services• Liquidity planning• Exit strategies

• Group employee benefits• Retirement solutions• Benefits for select employees• Employer-sponsored benefits

• Liability coverage• Protect business from loss of

owners or key employees

• Retirement income• Education funding• Asset and income protection• Investment services

The Role of an Advisor – The FactsThe Role of an Advisor – The Facts

Do you have an advisor who understands your needs?Do you have an advisor who understands your needs?

• Business Owners tend to seek advice of professionals

- 66% prefer one advisor for both personal and business needs- 48% have a Primary Financial Advisor

• Top three advisors:

- Accountant- Financial Representative- Lawyer

•Ask friends, business associates or financial professionals

•Does the advisor understand your business?

•Does the advisor ask questions or just make assumptions?

•Can the advisor provide you with personal and business advice?

•Does the advisor have access to other specialized advisors?

Finding an AdvisorFinding an Advisor

Look for an advisor who can bring together all the expertise you need.Look for an advisor who can bring together all the expertise you need.

Behind Every Great Professional is a Network of SpecialistsBehind Every Great Professional is a Network of Specialists

It takes teamwork to answer your business planning needs.It takes teamwork to answer your business planning needs.

•The Northwestern Mutual Financial Network

•One stop power house of expert guidance

•Collaborating with your CPA, Attorney, banker and others

Expert GuidanceExpert Guidance

You have access to a network of financial specialists to meet your unique needs.

You have access to a network of financial specialists to meet your unique needs.

•What risk concerns keep you up at night?

•Are you protecting your physical, people and business assets?

•Do you have a strategy that can grow along with your business?

•Do you have access to a knowledgeable, trusted advisor?

Let’s ReviewLet’s Review

No time like NOW to begin the review process and get the help you need, so……You can sleep better at night.

No time like NOW to begin the review process and get the help you need, so……You can sleep better at night.

I Want Your FeedbackI Want Your Feedback

Lastly, Thank you and sleep tight!Lastly, Thank you and sleep tight!

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

The Northwestern Mutual Financial NetworkTM is a marketing name for the sales and distributionarm of The Northwestern Mutual Life Insurance Company, its affiliates and subsidiaries. The productsand 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.

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.

Strategic Employee Benefit ServicesTM is a nationwide group marketing program providing specialized services in the employee benefit arena exclusively through the Northwestern Mutual Financial Network TM .

Securities are offered through Northwestern Mutual Investment Services, LLC, member NASD and SIPC.1-866-664-7737.

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.

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.

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.

The Todd Organization is the marketing name for Todd Consulting, Inc., which is affiliated with Northwestern Mutual, and provides and administers executive benefit plans.

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.

DisclosuresDisclosures

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Risk Management V2