No Surprises: Managing Risk in Family Portfolios

Creating portfolios that are customized to a family’s unique investment goals and risk tolerance requires ingenuity and flexible thinking. However, the execution of risk management should be more systematic. Ultimately, the effective investors employ a risk management framework that accounts for potential risk at every stage of the investment process—one that considers four crucial components: strategic risk, implementation risk, portfolio monitoring, and communication. By systematically following this framework, families will understand the key mechanisms of successful risk management and what is at stake; they can also more effectively pursue their investment goals.