Glosario E - I

Glossary E-I

  • Enterprise risk management (ERM). Is the process of coordinated risk management that places a greater emphasis on cooperation among departments to manage the organization's full range of risks as a whole.
  • Equality. The resources each family member receives through the family business are equal among family members.
  • Equity. The resources each family member receives through the family business depend on their actions, input or performance.
  • Family. Refers to those individuals related by blood, marriage or adoption who have, or will have, a claim to the family business. Includes members from multiple generations and multiple branches of the family – whether or not they work in the family business.
  • Family assembly. Forum for all family members dedicated to information sharing and discussion of family related issues such as family business, family life and family wealth management.
  • Family business. Refers to family business as a business that is owned or controlled by a group of people related by blood, marriage or adoption. When a family owns or controls several lines of business, we use the term family business more generally, i.e., to refer to the family enterprise.
  • Family business governance. The governance system that, in parallel, takes into consideration corporate governance and family governance. Basically a set of rules, that creates a balance between the interests of the family and the interests of the business it owns.
  • Family charter/family constitution. A document stating the family’s formal rules and regulations.
  • Family committees. Groups of family members responsible for various aspects of family life, such as an education committee, family governance committee and/or social committee.
  • Family council. Formal group or committee of family members responsible for day-to-day family-related decisions and their implementation. Is the link between the family and the business in large families.
  • Family foundation. An independent private foundation whose funds are derived from donations of members of a family. Family members often serve as officers or board members of family foundations and have a significant role in their grant-making decisions.
  • Family governance. Refers to the formal and informal rules and bodies that structure the decision-making processes of a business-owning family.
  • Family office. Separate entity apart from the operating business (and sometimes created with the assets realized after the sale of a family enterprise) consisting of a diversified wealth portfolio held for the benefit of the family.
  • Family-run company. Company in which various family members run the business.
  • Family system. Manner in which family members make decisions and interact.
  • Family tree. Diagram which illustrates the family’s ancestral origins and connections, starting with the present arrangement of children, parents, grandparents, siblings, cousins, etc., and moves back in time; often used by family enterprise consultants in the form of a “genogram” (see below for definition) to help the client family understand certain patterns and issues that have recurred through several generations.
  • Genogram. Diagram often used by family enterprise consultants to help the client family understand certain patterns and issues that have recurred through several generations; the diagram is used to help the client describe a family tree (see definition above) to highlight such patterns and issues.
  • Governance due diligence. An examination on the current governance practices.
  • Heir apparent. Person whose succession to a leadership position (e.g., next president or CEO) appears certain often by informal designation.
  • Independent board member. Typically refers to a nonexecutive board member who has no business or contractual relationship with the company, other than his or her service as a board member, is not under influence of any other board member or group of shareholders, and who is generally capable of action in an informed and objective manner.
  • Internal audit. The examination, monitoring and analysis of activities related to a company's operation, including its business structure, employee behavior and information systems. An internal audit is designed to review what a company is doing in order to identify potential threats to the organization's health and profitability, and to make suggestions for mitigating the risk associated with those threats in order to minimize costs.
  • Internal controls. Process to ensure the integrity of financial and accounting information, meet operational and profitability targets and transmit management policies throughout the organization.