Practical Aspects of Knowledge Risk Management in Corporate Finance for Family Firms

Abstract

Family firms show in many aspects a different profile compared to (listed) corporates, primarily (a) because of their complex decision-making process that involves owner-managers who might have to consider non-rational decision factors and (b) the lean operational teams for the execution. These differences become of particular interest when looking at corporate finance activities of family firms, where confidentiality and execution speed, as well as the availability of specific and critical knowledge, is key. Therefore, knowledge risk management in family firms requires peculiar management attention and must be carefully considered when setting up the finance function of the company. The chapter discusses the broad variety of relevant knowledge risk factors and presents practical examples of critical situations in corporate finance. It proposes a framework that is intended to help decision-makers in developing an integrated view on knowledge risk management in corporate finance.