The successive crises that occur on a global scale, almost at the speed of light, such as the most recent example of the war between Israel and Hamas, demand a new look at governance and the management of the assets of business families.

Don't concentrate. Diversify. This is the maxim of the “polycrisis” world.

In recent decades, transformations and innovations have occurred at a frenetic pace, increasing the challenges to the survival of family businesses.

We leave behind the VUCA world ( volatility, uncertainty, complexity and ambiguity) that became notable in the business scene due to profound technological changes in the 90s. The acronym VUCA was initially used by the North American military to define the post-Cold War environment.

With the pandemic, we migrated to the BANI world , in Portuguese: fragile, anxious, non-linear and incomprehensible. Conceived by the American anthropologist and futurist, Jamais Cascio, the BANI concept represents the possibility of everything changing instantly, without explanation, without us having any control over the changes.

The term polycrisis, created in the 90s by the French philosopher, Edgar Morin, was revived at the beginning of this year by the World Economic Forum, in Davos, to refer to crises that happen at the same time, which interact and enhance each other. In this scenario, the perpetuity of assets is linked to business diversification and the strategic allocation of the portfolio of assets, investments, shareholdings, among others, with the creation of long-term value.

There is less and less space for the old family business model, that business model in which the “owner” is owner and manager, with centralized decision-making processes and day-to-day operations under the responsibility of family members.

With the founder focused 100% on the daily management of the business, it is not surprising that he lacks time to think strategically, with a long-term and future vision, which ends up contributing to the high mortality rate of family businesses. In Brazil, where 90% of organizations have this profile, 30% survive to the second generation and only 3% to the third generation.

The new face of family governance is to transform the business family into an investing family, an evolution of the previous model. Investment diversification transcends the business, increases its assets and perpetuates its wealth throughout generations. There is a genuine concern in ensuring and planning the longevity of assets in totality.

As Professor Thomas Zellweger, from the Swiss University Saint Gallen, describes, the business family is characterized by family, corporate, structured and active governance (Advisory or Management Board, Family Council, Shareholder Agreement, Professionalized Management, Succession Planning, Code of Conduct, with division of responsibilities of family managers and structuring of the family office).

The life cycle of family businesses may be short, but the investing family has a long-term horizon and seeks alternatives to perpetuate its wealth through generations, whether as a shareholder or as an investor. The model resembles a family-owned company.

Recent turmoil, especially the Russia and Ukraine conflict, has changed the perception of investment risk.

Geopolitics trumps the economy as the top concern, followed by recession and inflation, according to the UBS report, Global Family Office 2023.

Faced with this new reality, family offices are redefining, for the first time in many years, the asset allocation of managed portfolios. Managers are anticipating changes in asset positioning to protect themselves from global uncertainties.

The main objective of the 230 family offices interviewed on four continents, which together total 495.8 billion dollars, is to support the generational transfer of wealth.

Contemplating new investment opportunities, with a balanced approach to risk, so that it is possible to reap solid and lasting returns, is a process that requires discipline and knowledge.

Each family is unique and has specific needs. The investment policy outlined must be in line with the interests of the family group and its return objectives. Adapting your business and investments to environmental, social and business governance practices has become a matter of survival, with no return. The investing family understands that sustainability and profit can indeed go hand in hand.

Brazil has tremendous potential to meet international demands and become the protagonist of the global energy transition. Agribusiness families, mainly in the sugar-energy sector, play a fundamental role in the fight against climate change and improving living standards in the 21st century.

As the founder of the World Economic Forum, Klaus Schwab , highlighted , the world is moving towards “a green, sustainable economy and, now, an era of artificial intelligence”. In this context, he said that the future of Brazil and Latin America is promising, but it depends on aligning industry, environment and technology.

Having a clear purpose is also a way to motivate and engage new generations and attract talent. Making space for new generations to have the opportunity to create impactful businesses, for example, is a form of diversification and generational transfer of wealth, adding value to the family and its legacy.

Don't concentrate. Diversify.