Preserving family wealth is an extremely complex task. The global economic landscape is increasingly volatile and families with significant business assets or private wealth clearly have an interest in stabilizing their downside in this new environment.
The recent financial crisis has led families to reconsider their approach and behavior toward risk. Perceptions of risk are often subjective and can only be averted through a process focusing on long-term objectives.
The following parameters provide the core of our risk management framework:
- Identify which factors could destabilize your portfolio and impact your diversification
- Awareness that asset correlations frequently change throughout history with conventional wisdom/assumptions frequently being incorrect (e.g. fixed income yields and equities can be both positively and negatively correlated over time)
- Appreciation of both a "variant perception" and imperfect knowledge structures in markets
- Identifying potential impact of geopolitical events through maintaining awareness of the major global political and financial environments