ACCESS Family Business - November 2019 by Access News Australia (ANA)

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With David Pring Welcome o KPMG Family Business ea ure ar icles. I you would like o discuss hese ar icles or how KPMG can help wi h your business please eel ree o con ac me on 9455 9996 or davidpring@kpmg.com.au

Welcome Bringing harmony o business amilies n CAROLYN COLE S weal h crea ors and heir amily members pursue grow h and fnancial s abili y rom genera ion o genera ion, business amilies o en fnd in er amily ensions aring in o con ic ha can las decades. In mos cases his undesired ension comes a a nega ive cos o he business i sel and has a risk o des abilizing he fnancial ecosys em hose same amily members rely upon. However, care ul planning, clear communica ion, and a commi men o coopera ion around a shared purpose may help mi iga e he risk o con ic . Tis is a conscious journey or a amily which involves work, however he resul rom his process is priceless o mos amilies.

Business family conflicts are typically attributed to communication issues Con ic s ypically s ems rom some level o communica ion breakdown wi hin a amily. One o he grea es challenges or amily members is o unders and wha each person is en i led o know and wha si s ou side o heir au horized scope. Tis can be con using or a varie y o reasons. Firs ly a amily member is no necessarily an owner, and even i he or she is a shareholder, ha does no au oma ically mean hey are privy o day- o-day opera ing decisions wi hin a business. Secondly, here are o en expec a ions o employees and communi y members, ha because a person is a amily member, he or she will have access o in orma ion or can in uence decisions a he business leadership level. Tis can be ar rom he ru h. Addi ionally, con ic may arise when a amily member who is an employee o a company has in orma ion in advance o o her non-employee amily member shareholders. Te ques ion o , “why wasn’ I old abou ha ?” can crea e he impression ha here are insiders and ou siders in he communica ion channels. I can also be very embarrassing or amily members o learn abou business decisions rom media releases or company employees.

In a business amily con ex , e ec ive governance means clari ying he roles and responsibili ies o he amily members involved in he business, o crea e an inclusive environmen and ensure each genera ion and each individual unders ands heir “lane” and why hey’re in i . A proper governance s ruc ure makes i clear who in he amily makes a paricular decision, as well as how, when, and why hey do so—and who needs o know abou i . I should also es ablish a mechanism or resolving dispu es and provide a roadmap or amily members who wish o exi he business, should hey wish o. No one like he eeling o being in a locked room. Jus knowing here is an exi op ion, provides all amily members he oppor uni y or di eren decision making processes.

The path to harmony begins with creating a process

Establishing—or improving—a family office can support better governance

One o he mos e ec ive ways a business amily can reduce he likelihood o con ic and crea e harmony hroughou he amily ecosys em is by in roducing a s ruc ure and process around communica ion and decision making. Many people re er o his as “governance”.

A “ amily o ce” is a group o pro essionals (accoun an s, lawyers, weal h managers and more) who come oge her o in egra e in orma ion abou he business amily and develop clear processes around communica ion and decision making. A amily o ce can be invaluable in helping business amilies improve

organiza ional governance and build grea er harmony hrough he amily i sel . o es ablish a amily o ce or evalua e an exis ing one, ake s ock o he pro essionals already advising he amily. Tis should include no only hose advising amily members in charge o running day- o-day opera ions, bu hose suppor ing o her amily members who have a direc or indirec in eres in he amily business. How well do hese myriad pro essionals work oge her? Are hey communica ing e ec ively? I no , ha could be a key ac or con ribu ing o any amily discord, as he recommenda ions single amily members receive, may no be aking he en ire business—or amily—in o accoun . An e ec ive amily o ce mus comprise pro essionals willing o embrace eamwork and priori ize he business amilies’ in eres s over heir own. All oo o en, business amilies fnd heir pro essional advisors compe ing or a grea er share o he amily “pie”; his ongoing compe i ion can inhibi eamwork and lead o con ic down he road. Te same is rue or pro essionals working or he amily’s business(es) ra her han he amily i sel —a lack o communica ion be ween hese advisors and hose o he amily o ce can make i di cul or amily members o know wha

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hey need o know, when hey need o know i , in order o make he imely and e ec ive decisions. o allevia e con ic and os er harmony, business amilies should inves in experienced pro essional advisors ha are willing o work oge her and who bring an unbiased, impar ial perspec ive o he maters o he day. Tey need advisors who can clearly ar icula e he impac o a decision on he business—and on he amily members hemselves—coordina ing e or s in order o con inually move he amily business, and he amily’s own plans, orward. Any hing less is simply unaccep able.

Avoid business family conflict with better governance and communication Con ic may be an all oo common ea ure o business amilies, bu i doesn’ have o be. An e ec ive governance s ruc ure, suppor ed by a well- unc ioning amily o ce, can provide he clear communica ion needed o mi iga e he risk o amily con ic and build a grea er sense o harmony across bo h he amily and he business. First published by Carolyn Cole, Vice President, Family Office for KPMG Enterprise in Canada, on kpmg.com

Family Business

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Cyber criminals are on he move – here's how o keep your amily sa e n GORDON ARCHIBALD O E and more amilies are living on he web. I s helping hem s ay connec ed as hey work, shop, bank and access heal h in orma ion rom mul iple amily devices a home and on he move. …Bu cyber criminals are also on he move. Since July he Aus ralian Cyber Securi y Cen re (ACSC) has received more han 13,500 repor s o cybercrime wi h iden i y he and online raud he mos common. Cyber criminals mos commonly arge Aus ralian amilies hrough phishing atacks: where criminals ry and rick people in o clicking links in messages claiming o be rom heir bank or by asking hem o fll ou online banking orms. Tey also use email, o gain access o your devices o ins all malware and look or known vulnerabili ies in so ware or opera ing sys ems. Families can ake seven proac ive s eps o beter pro ec hemselves and heir da a:

1. Education: Ou o all he layers o cyber pro ec ion, humans are he mos vulnerable. People, paricularly children, are inheren ly rus wor hy. Cyber criminals know his and exploi our inna e decency – so educa e your children abou wha suspicious ac ivi y looks like. Jus as you would wi h a amily fre escape plan consider developing amily rules abou

wha o share and who is ok o alk o online. Unders and a bank or governmen depar men would never email reques ing personal de ails. Cybercriminals are cons an ly coming up wi h new ways o gain your rus and your da a so check he Aus ralian Cyber Securi y Cen re or known hrea s.

2. Patching: PA CH, PA CH, PA CH and pa ch again. Businesses wi h good cybersecuri y prac ices cons an ly upda e heir opera ing sys ems and applica ions. You should oo. urn on au o upda es on all devices including lap ops, mobiles and smar devices. In 2017 a global ansomware atack crippled hospial sys ems around he world. Te cause? A remo e code execu ion vulnerabili y ha only exis ed on ou da ed Windows opera ing sysems. Make sure you have an ivirus so ware ins alled and keep i up o da e oo.

3.Passwords: Passwords are an impor an line o de ence agains cybercrime – bu mos are easily guessed. I ’s easy or someone o collec in orma ion you reveal abou yoursel online and use i o crack your passwords. Tere ore, i is impor an ha you avoid he use o your amily members’ names, da e o bir h or any o her easy- o-guess personal de ails. You should avoid using he same passwords across mul iple devices. Las ly, you should use wo ac or au hen ica ion or online banking ac iviies.

4.Social Media: Social media is an easy place or cybercriminals o mine personal da a so you need o be discerning wi h he in orma ion you share. Te setings o all major social media ne works have privacy op ions so approved ollowers can view your profle. Tink abou he in orma ion you share online like bir hdays, age, address, or school. Use a nickname or an al erna ive profle pic o help pro ec your iden i y when online gaming or on social media.

5. Public Wi-Fi: In orma ion shared on a public Wi-Fi ne work can be in ercep ed by cybercriminals. Use public Wi-Fi ne works wisely and wi h cau ion – make sure your an i-virus so ware and pa ching are up o da e and avoid sending or receiving sensi ive in orma ion. I you mus make a sensi ive ransac ion or send sensi ive da a you should only use secure websi es ha have: htps:// ins ead o htp:// and he lock symbol a he s ar o he address.

6. Privacy: Always read policies or websi es and applica ions on how hey use your in orma ion. I you’re no com or able wi h he in orma ion hey reques hen consider i you really wan o sign up. Te less personal in orma ion your amily shares online, he beter.

7. Backup: I you are compromised i is impor an you are able o recover amily pho os, videos,

personal and fnancial in orma ion. Your da a can be in en ionally s olen bu i can also be unin en ionally compromised hrough a hardware ailure or acciden al dele ion. I is impor an you backup your da a and enable au oma ic back-ups o your da a o a cloud provider or o an ex ernal drive. Tese key s eps and ac ivi ies will minimise he risk o being compromised. In he even o an inciden ake he ollowing s eps: • Immedia ely no i y your bank/fnancial ins i u ions o he inciden • No i y your amily and riends so hey are aware • Immedia ely change your passwords on all devices even i hey are di eren • In orm he ACSC & police • No i y he relevan websi es involved in he inciden • Have a cyber-specialis rebuild your device/devices • eques a credi repor rom a repuable credi re erence bureau So you hink you’ve heard his all be ore – well maybe you have bu i you are s ill using 123456 as your password hen you could be one o he 23.2 million hacked accoun s worldwide ha share your password. Tink again – your online iden i y will hank you. Article first published by Gordon Archibald, Partner, National Lead, Cyber Security Services, KPMG Australia on KPMG Newsroom.

PropTech: real es a e wi h some ex ra ech n CRAIG MENNIE n CHRISTOPHER OMEISSAH EAL es a e, a cons an opic o conversaion a dinner par ies bu he alk is more ocused on price ra her han real es a e echnology. So le ’s pause, re ec and learn some hing new abou real es a e: Proper y echnology or ‘Prop ech’. Te global Prop ech indus ry is predic ed o be wor h over US$20 billion by 2020 and our 2018 Global Prop ech survey revealed 93 percen o indus ry responden s el radi ional real es a e companies can no longer avoid becoming engaged in he Prop ech landscape. Bu wha exac ly is i ? Prop ech is broadly described as a new wave o services opera ing a he in ersec ion o real es a e and echnology. Tis essen ially encompasses wo main areas: Firs is he ounda ion layer; he par o he cons ruc ion process ha is ypically low- ech and cen red on rades. Tink hi-vis and hard ha s. For example, embedded sensors on a connec ed worksi e can collec and manage in orma ion rela ing o sa e y, cons ruc ion delivery and building per ormance. Domes ic frms are making waves in his area. Aus ralian company Ynomia developed in collabora ion wi h CSI O u ilises proprie ary BLEA (Blue oo h Low Energy Awareness racking) sensors, or resource and supply chain racking. Tis echnology provides real ime, au oma ed, loca ion-based insigh s on hree key ingredien s dic a ing projec success: labour, machinery and ma erials. racking hese in real ime makes he cons ruc ion process more e cien and in he long run lowers occupancy cos s and increases yields. Te second layer is he real es a e and hospi ali y layer. Tis is where new echnologies increase opera ional e ciencies and heigh en cus omer experience, which in urn maximises re urns on he underlying inves men . Aus ralian companies have already developed

clien communica ion apps or landlords, which acili a e a demand-based and e cien provision o services or heir enan s across commercial and residen ial proper ies. O her domes ic frms con inue o innova e building energy managemen sys ems (BEMS) which radi ionally only regula ed energy usage bu are now essen ially Io ecosys ems, allowing or he con rol and par ial au oma ion o many aspec s o building main enance. Wi h increasing in eroperabili y o sys ems manu ac ured by di eren companies, buildings can communica e hrough

echnology, sharing da a – and heir conversaions will amoun o a more e cien provision o services. Prop ech has he po en ial o power grow h in he real es a e and cons ruc ion secors bu i s adop ion is slow. I boils down o he idiosyncra ic, rela ively low- ech and complex na ure o he real es a e and cons ruc ion value chain. However he emergence o new leaders wi h high brand recogni ion such as Airbnb or egus and he ac new echnology is producing posi ive resul s means recogniion o he sec or is growing.

Companies are now s ar ing o display a real willingness o learn and collabora e by working direc ly wi h researchers and ounders o develop s ra egies capi alising on emerging echnologies, pioneer value and ul ima ely lead o adop ion.

Article first published by Craig Mennie, National Sector Leader, Real Estate & Private Equity and National Leader, Transaction Services; and Christopher Omeissah, Proptech Sector Lead, KPMG Australia on KPMG Newsroom.

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