Most organizations fail to plan for the departures of key employees until it is already too late. Fund managers must understand that creating an effective succession plan takes considerable time and requires an intimate understanding of the organization’s particularities. Informal succession plans are likely to lead to incoherent strategies, as well as biased employment decisions that may negatively affect firms’ abilities to adapt to the changing market and expose them to legal action. To avoid these dangers, a fund manager should adopt a mission statement; develop competency models; cultivate management buy-in; evaluate employee past performance and future potential; train, develop and retain high-potential employees; communicate the succession plan; and evaluate and test the plan. This article, the third in a three-part series, evaluates the risks of poor succession planning and provides a roadmap for developing a robust succession plan. The first article discussed the SEC’s proposed rule on business continuity and transition plans, the potential impact of the rule’s withdrawal, the importance of chief compliance officer (CCO) succession planning and the risks of using an outsourced CCO. The second article examined CCO hiring and onboarding; explored whether managers should departmentalize their compliance departments from their legal departments; and analyzed the risks of high CCO turnover. See our two-part succession-planning series: “A Blueprint for Hedge Fund Founders Seeking to Pass Along the Firm to the Next Generation of Leaders” (Nov. 21, 2013); and “Selling a Hedge Fund Founder’s Interest to an Outside Investor” (Jan. 16, 2014).