Improving risk management at portfolio companies starts with applying due diligence rigor to the portfolio company’s insurance program to improve coverage effectiveness, cost efficiency, and procurement transparency. Prudent risk management practices like loss prevention, crisis response, and business resumption preparation are then reviewed and improved to raise risk preparedness throughout the company.
This approach can be broadened to a fund’s entire portfolio of companies to ensure that the fund’s minimum required risk management and insurance standards are being met by each company.
Building value in portfolio companies is essential for private equity fund performance and success. Best standard risk management practices at portfolio companies builds and protects their value and reduces the chance of embarrassing surprises that could damage fund ROI and tarnish the fund’s reputation.