Foreword

This is our second report on risk management for family offices, following our initial 2020 study, "Surveying the Risk and Threat Landscape to Family Offices." This report comes at a time when the world is undergoing significant change, uncertainty, and volatility.

Much has changed since our last risk and threat assessment, conducted in the midst of the COVID-19 pandemic. We have now witnessed many new developments, including hybrid work models, information warfare by nation states in our digital lives, the advancement of artificial intelligence, and rapid medical innovation. Today, the US economy hums along, markets are near all-time highs, but the geopolitical landscape is far more volatile.

Russia’s full-scale illegal invasion of Ukraine is in its third year.  We have seen historical flooding in Dubai. We have learned to deal with spy balloons, cyberattacks, and intellectual property theft as tensions between Taiwan and China escalate. The October 2023 terrorist attacks in Israel, followed by military operations in Gaza, as well as the most recent clashes between Iran and Israel, point to a possible resurgence of Middle Eastern instability. Although these issues may not be on the doorstep of all family offices, their widespread impact on an interconnected world necessitates their inclusion at the forefront of risk mitigation strategies.

From December 2023 to January 2024, we surveyed over 200 family office respondents from 33 countries around the world. Participants included family members, C-suite executives, investment professionals, and other family office staff, providing a comprehensive overview of how family offices manage risk in their operations and investments. To add depth to this study, we examined various types of family offices based on region, net worth, organization, and maturity.

Family offices continue to be hampered by resourcing challenges across core functional areas and mindsets, as identified in our last risk report.  Families continue to have reactionary risk mindsets, lack robust insider threat programs, and see technology as a risk management panacea.

These issues, which we will discuss further in this report, are creating potentially dangerous gaps in risk management defenses that cannot be filled with quick fixes. Rather, it will require a fundamental shift in culture and mindset toward prediction over reaction, as well as increased professionalization of the risk management function in family offices. Furthermore, innovative operational strategies, such as the leveraging of fractional risk and security resources, offer a potential solution to family offices' risk management postures.

This report covers the main findings mined from a rich reservoir of family office survey data. Therefore, should you require any additional information or data cuts beyond the following charts and commentary, please get in touch with me or your contact at Dentons.

I am especially grateful to all of the survey partners and everyone who took part in the research for their time and insights. Thank you for helping to create a resource for the entire family office community. 

 If you are part of a family office, whether as a family member, employee, board member or senior executive, we hope you find this report thought-provoking, insightful, and actionable.

Regards,

Edward V. Marshall