How Agencies Should Think About and Manage Risk | EP 20

In this episode, Peter Kang and Sei-Wook Kim break down how agency owners should think about risk, not as isolated problems to react to, but as ongoing exposure that needs to be actively managed. Using a simple risk matrix, they explain how to prioritize risks based on likelihood and impact, and why high-impact risks deserve disproportionate attention. They then walk through nine of the most consequential risks agencies face, from founder burnout and partner misalignment to legal exposure, cash flow insolvency, client concentration, and strategic drift. For each, they share practical ways to reduce downside and increase the odds that the business survives unexpected shocks. This episode is a reminder that resilience isn't about eliminating uncertainty. It's about designing an agency that can withstand it. Key Moments Defining Risk for Agencies – Risk as exposure to uncertainty that can materially impact the business. The Risk Matrix – Prioritizing risks by likelihood and impact, and why high-impact risks deserve disproportionate attention. Risk #1: Founder Burnout – Why founder health, compensation, and recovery are business-critical. Risk #2: Partner Conflict & Misalignment – How unresolved tension between partners can destroy otherwise healthy agencies. Risk #3: Key Person Dependency – The dangers of relying too heavily on a single individual for sales, delivery, or operations. Risk #4: Client Legal & Delivery Exposure – How vague scopes, weak MSAs, and poor communication escalate disputes. Risk #5: Employee Legal & Compliance Exposure – Why poor performance management and unclear policies create legal risk. Risk #6: Business Continuity & Infrastructure Risk – Cybersecurity, data breaches, and operational interruptions. Risk #7: Insolvency & Cash Flow Management – Why profitable agencies still fail without disciplined cash management. Risk #8: Client Concentration – The compounding danger of over-reliance on a single client. Risk #9: Strategic Misalignment – Betting on declining markets, trends, or ICPs and slowly capping growth. Closing Thoughts – Risk management as a way to increase survival, not eliminate uncertainty. Real Talk Takeaways Most agencies don't fail from one mistake, they fail from unmanaged high-impact risks compounding over time. Founder burnout is a structural business risk, not a personal weakness. Clear operating agreements and role definitions prevent partner conflict from becoming catastrophic. Documentation, cross-training, and redundancy reduce key person dependency. Tight MSAs, clear scopes, and early communication are the first line of defense against client disputes. Poor performance management creates legal risk long before termination does. Cash flow discipline matters more than profitability on paper. Client concentration magnifies every other risk in the business. Strategic choices compound slowly, but misalignment is one of the most dangerous long-term risks. Timestamps 00:00 – Introduction: Why Risk Matters for Agencies 01:00 – Defining Risk as Exposure to Uncertainty 02:05 – The Risk Matrix: Likelihood vs. Impact 03:10 – Risk #1: Founder Burnout 07:20 – Risk #2: Partner Conflict & Misalignment 13:40 – Risk #3: Key Person Dependency 18:30 – Risk #4: Client Legal & Delivery Exposure 25:20 – Risk #5: Employee Legal & Compliance Risk 29:40 – Risk #6: Business Continuity & Infrastructure 33:45 – Risk #7: Insolvency & Cash Flow Risk 35:30 – Risk #8: Client Concentration 37:45 – Risk #9: Strategic Misalignment 43:05 – Closing Thoughts: Designing for Survival Notable Quotes "Risk is exposure to uncertainty that can materially impact the business." — Peter Kang "The number one job of a founder is staying in business." — Sei-Wook Kim "Founder burnout isn't just personal, it's a systemic risk to the company." — Peter Kang "Vague scopes and unclear agreements are liabilities, not conveniences." — Peter Kang "You don't feel strategic misalignment immediately, but it quietly caps growth over time." — Sei-Wook Kim Links & Resources Peter Kang on LinkedIn: https://www.linkedin.com/in/peterkang34/ Sei-Wook on LinkedIn: https://www.linkedin.com/in/seiwookkim/ AgencyHabits Website: https://www.agencyhabits.com/ AgencyHabits on LinkedIn: https://www.linkedin.com/company/agencyhabits/ Barrel Holdings Website: https://www.barrel-holdings.com/ Barrel Holdings LinkedIn: https://www.linkedin.com/company/barrel-holdings/