A lot of companies think of succession planning in terms of employee retirement.

But imagine that your MLRO or Portfolio Manager resigned tomorrow.

Realistically, is there someone in your team who can bridge the gap left by the departure?

If the answer is "No", then you must start succession planning.

In its simplest form, succession planning is about identifying key positions within your business and developing skills and action plans for individuals to take on those positions.

Here's a very quick snapshot of how succession planning works:

1. Know

Identify the key / critical positions in your business.

Identify the current skills set within your business – do this for the whole department pertaining to the key / critical position, not just one person.

Identify how your business's landscape is likely to look in the next 3 years.

2. Evaluate

Now draw a parallel between the future landscape of your business and the current skills.

Is there a potential gap?

For example, with ESG Reporting coming in fast, are your key officials skilled in this?

3. Develop

Now that you identified 1) key/critical positions 2) the current skill set and 3) the future landscape, create a personalized training and development plan.

Involve the individuals in it – they do the job day in, day out and they know where they need more support.

Don't make the mistake of planning this without them – you will reduce buy-in significantly.

4. Worst-case scenario

Now imagine that your key person leaves.

How will this affect your business?

If your answer is: I must find someone to replace the role, you are already racing against the clock and in some key positions, like regulatory for example, this can pose a significant burden and risk for you.

So, for each key position, wherever possible, have someone 1 level down that you continuously develop.

Where that is not possible, create collaboration between departments and key individuals to increase knowledge of at least the basics so the most critical work can be shared, temporarily, between teams.

Create a trusted network of advisors so that in the worst-case scenario, you can outsource the work whilst you find someone new.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.