Magellan channels Tyson in its struggle with key man risk

Magellan has acknowledged that the group would struggle to cope with any sudden exit by Hamish Douglass.

Veteran fund manager Hamish Douglass on a panel in Sydney earlier this year. (Hollie Adams/The Australian)

Magellan Financial Group has admitted it has yet to crack the code on how it would cope with any sudden departure of high-profile leader and co-founder Hamish Douglass, aware the threat could provide a heavyweight blow.

Mr Douglass, a rich lister who serves as the face of the $40 billion fund manager (MFG), currently operates in the roles of chief executive officer and chief investment officer and also holds the crucial position of lead portfolio manager of the group’s global equity strategy.

His importance to the $3.5bn business, tagged as “key man risk”, has forced the business to consider how it would manage without him at the helm.

“The board fully recognises the inherent risks associated with Hamish’s roles given the stage of development of our business,” chairman Brett Cairns told investors at the group’s AGM today.

“A business continuity plan is in place and this plan is regularly reviewed.”

Mr Cairns failed to reassure investors on the strength of the plan, however, quoting former champion boxer Mike Tyson to outline the depth of the ‘key man risk’ challenge.

“Everyone has a plan, until they get punched in the face,” he said.

“Absent something transformational, our key man risk will take time to mitigate.”

The company insisted progress had been made, with several strategic hires over the past decade, but an alleviation of the threat would take several years.

“The board and Hamish are motivated to continue to mitigate the risks associated with our business, including key man risk, and we expect further progress to be made in the coming years,” Mr Cairns said.

Investors were uneasy on the update, pushing Magellan shares down 2.2 per cent to $21.42 at 1pm (AEDT).