Protect your Business April 2018 Who wants to be in business tomorrow? And who is here only for today? Show of hands – Who wants to protect their business? If your goal is to grow the VALUE of your business, then you will be interested in Risk Management. We are here to talk to you about the importance on managing and identifying your risks and what it means to protect your business.

Preparing for an interview with compliance, a regulator or client’s counsel is key because your licence, reputation and livelihood are all at stake. Ellen Bessner, Babin Bessner Spry LLP When you think about Risk Management, think about your licence, your reputation and your livelihood I would suggest thinking about what is at stake BEFORE preparing for an interview with carrier compliance, a regulator or client’s counsel. Imagine every day is preparation. [Ellen Bessner is an experienced commercial lawyer and author of “Advisor at Risk – a roadmap to protecting your business”.] It may not be something you normally think about but the health and value of your business depends on it. 2

A business thrives on some risk… … but take the risk with an upside, and … avoid/mitigate those that only have a downside.

Agenda 1 2 3 Value your business Risk management and your business Best practices 3

Value Your Business 1 CREDIBLE PROFESSIONAL TRUSTED SUCCESSFUL Manage your business in a way that is… CREDIBLE PROFESSIONAL TRUSTED This presentation is based on risk management practices of our insurance company applied to the Advisor’s business. The essence of your business’s value and ours is the TRUST clients put into your advice and our products. We depend on each other to ensure a sustainable business model. Trust will go up as you improve credibility (KYC, KYP, suitability) and professionalism (developing repeatable practice and sales process) [The more you are these 3 things – the more value you have built in your business.] SUCCESSFUL

Value your business Know your business Know your products Few or no controls Know your business Know your products Loss of clients’ trust Know your clients Reputational damage Know your compliance obligations E.& O. claims Best practices and training Legal fees and damages Treating Customers Fairly Regulatory investigation Fines Risk Management is about achieving a balance – making conscious decisions about risks worth taking and mitigating those risks while AVOIDING risks that are not going to add value. [There are activities/behaviours that improve the value of your business and there are activities/behaviours that put that value at risk.] Warnings, supervision, termination Manage Risk 6

Manage Risk Know your business Know your products Know your clients Know your compliance obligations So … we’ve decided you are here for the long term. We are all in the insurance business so we understand risk and protection. Managing Risk means matching “control” practices to identified risks to protect your clients and your business. Regulatory compliance practices applicable to your business have been developed as controls in response to actual or potential consumer harm. Your compliance obligations are intended to shift the risk from your client to you, but also give you an opportunity to develop the controls your business needs to remain sustainable and your customers protected from risks of financial harm. Your risks of failing to integrate these practices also includes risk to your livelihood, relationships with your clients, insurers, and regulators. Here are some ways to manage risk: Know your business – who is your target market? The elderly or HNW individuals? What are the special risks of this target market? For example, is there a high risk of money laundering? Do you conduct your business primarily face to face or through other means? Know your products – what are the risks/rewards? Know your client – KYC, FNA Know your compliance obligations – COI/Disclosure/AML/Privacy Best practices and training – raise the bar Above all…Treating customers fairly And while you’re at it…document, document, document. [Knowing your business, knowing your products, and know your clients – is value] [Knowing your compliance obligations, best practices and training with an overlay of treating customers fairly – will inform your risk management strategy …..(next slide)] Best practices and training Treating Customers Fairly

Few or no controls Loss of clients’ trust Reputational damage E.& O. claims Legal fees and damages Regulatory investigation [Having few or no controls de-values your business.] Without compliance controls, your greatest risk is losing your client’s trust. No trust = no business. Consider – how much business interruption can you afford? For a suspension or a week-long audit? or losing your livelihood if your license is revoked. Fines Warnings, supervision, termination 8

Risk management and your plans 2 Risk management requires you to evaluate your business risks and helps reduce risk by adding controls. Regulation and industry best practices help you control your risk. 1 LIST YOUR RISKS Close Gap/ Risk 2 4 VALUE YOUR BUSINESS Risk management – about the steps: 2. Understand compliance requirements  understand that these requirements protect you – possibly from your own clients’ complaints and regulatory scrutiny 3. Identify your controls  develop and implement repeatable processes 4. Document, document, document  Document your process every time – make it a habit Risk management should also include ANNUAL REVIEW of your practices for emerging trends in your business and the regulatory environment. [Risk mitigation :] List your risks – examples on the next slide Understand Compliance Requirements as controls to manage your risks Identifying your controls – what controls do you have in place that helps reduce risk? How can best practices and compliance requirements be integrated as controls Document this cycle and close gap –having consistent files and documenting your processes – drives up the value of your business. UNDERSTAND COMPLIANCE REQUIREMENTS DOCUMENT 3 IDENTIFY YOUR CONTROLS

Examples of Improving Your Business BUSINESS ACTIVITY SUSTAINABLE BUSINESS RISK CONTROL DEVELOPING A LEAD CASL non-compliant communication Consent Unsubscribe Document Email Text Efficient SALES PROCESS Complaints Chargebacks Reputation Disclosure KYC FNA Reason why Document Suitable Sale Here are some examples of how compliance practices can support the value of your business Controls put the focus on credibility and professionalism = this increases trust  protects value [Here are some examples to help improve your business CASL – understanding social media Sales Process –as part of meeting your client there are document your process, use customizable templates KYC – A control that helps you identify your client and understand financial circumstances FNA – Back up to the math (How much protection is required) Reason why document - The purpose (i.e. insurance to protect mortgage]

Best practices 3 Build your risk strategy Create habits to keep your business fit Develop your controls Understand Compliance requirements Finally, I would like to add your best protection is: Communicate with your clients – KYC, FNA, KYP, Disclosure of conflict of interest (suitability, reason why) Document, document, document – Document everything on this checklist, and write as if your documentation will be read as testimony in a court of law. This will help your client see your value and remind them of your value Make your practices habits Look for helpful tools and guidance documents Educate yourself and stay connected with today’s compliance and best practices 11

Bridgeforce provides tools to help Privacy Breach Anti-Money Laundering Market Conduct Guidance Documents Disclosure and Privacy Code of Conduct To support your Best Practices and keep your compliance controls current. Compliance News 12

Questions?

This presentation is for advisor use only This communication is published by ivari with material obtained from a number of third-party sources and is intended for advisor use only. Any information contained in this presentation is intended for general information purposes only and should not be considered specific or personal investment, insurance, estate planning, legal or tax advice or a solicitation to purchase insurance. While reasonable efforts have been made to ensure that the contents of this presentation have been derived from sources believed to be reliable and accurate at the time of publication, ivari does not warrant the accuracy or completeness of the information contained herein. Examples given in this presentation are for illustration purposes only. The specific facts and circumstances of each case will differ from client to client. Neither ivari, nor its affiliates, officers, employees or any other person accepts any liability whatsoever for any direct, indirect or consequential loss arising from any use or reliance on the information, general strategies or opinions contained herein. No one should act upon the information or examples without a thorough examination of their legal and tax situation with their own professional advisors based on the facts of their specific case. TM ivari and the ivari logos are trademarks of ivari Holdings ULC. ivari is licensed to use such marks.

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