Managing risk as a day-to-day activity:
Understanding the challenge
The USB Global Family Office Report 2023 states that: “There’s a mismatch between family offices’ top stated purpose of wealth transfer and the processes, governance and risk management in place to ensure that.” [i] The UBS Reportobserved a stark contradiction: while the transfer of wealth is identified as the foremost purpose of family offices, only 42% have a formal succession or governance framework in place. This disconnect exposes families to significant structural vulnerabilities, particularly in the face of rising global instability.
Families tend to be adept at navigating investment risk. Yet broader risk management, especially non-financial risk, is often underdeveloped or overlooked. Among the most pressing of these is geo-political risk: the threat posed by political, economic, and social volatility across jurisdictions where a family’s assets, operations, or members may be located.
Geo-political risk refers to the probability that political events or decisions, such as regime changes, armed conflict, sanctions, terrorism, or economic disruption, will negatively impact the family, its wealth, or its ability to operate across borders. This includes:
- Armed conflict or regional instability
- Political violence, terrorism or criminal threats
- Government upheaval, regime changes, or legislative shifts
- Sanctions, trade disputes and regulatory changes
- Currency devaluation or capital controls
- Mass migration or civil unrest
- Diplomatic breakdowns or restricted mobility
The question every wealth-holding family should ask: how prepared are we for disruption and can our structures and governance frameworks withstand it?
A Strategic Response
A comprehensive risk management plan is not only a prudent step, but also essential. While many families perceive this as complex, the reality is more achievable than assumed. With the right structure, an annual risk review can offer immeasurable value, enhancing both family preparedness and the long-term preservation of wealth.
Risk planning sits within the broader family governance framework, ideally as a documented policy managed by the Family Council or, where no formal council exists, tabled at the Family Assembly. The process compels families to consider “what if” scenarios, articulate potential responses, and build resilience into both their thinking and structures.
The outcome? Families are empowered to act decisively in moments of disruption, ensuring their wealth strategy remains aligned with long-term objectives, even in adverse conditions.
Practical and Technical Considerations
An effective risk governance framework need not be overly sophisticated. It should, however, be proportionate to the complexity of the family structure, asset base and global footprint. At a minimum, the following should be considered as part of the risk governance framework:
- Appoint a Risk Officer: a family member or trusted adviser to coordinate annual reviews.
- Maintain a Risk Register: documenting known and emerging risks alongside mitigating measures.
- Develop a Risk Management Policy: a short, formal document that outlines roles, review frequency, and reporting structures.
- Undertake Annual Reviews: regular reflection helps maintain awareness and adjust strategies where needed.
The risk register should contain the following columns:
| Date | When the risk was assessed or reviewed |
| Risk Description | What is the identified threat? |
| Likelihood | How probable is it that the event will occur? |
| Impact | What is the potential financial or personal damage? |
| Mitigation Steps | What can be done to reduce exposure? |
| Adjusted Risk | Residual risk after mitigation |
While technical in nature, this approach introduces discipline, clarity, and forward-thinking into family decision-making.
Importantly, if mitigation measures are not actively implemented, even the most elegant register becomes redundant. The value lies in both planning and execution.
Mitigating Geo-Political Risk: Practical Strategies
In today’s world, geo-political risk is no longer theoretical. From trade disputes to terrorism, from tax law reversals to regional conflict—these are present-day realities that demand careful planning. Key mitigation strategies include:
Multi-Jurisdictional Structuring: Avoid over-concentration in a single jurisdiction. Diversify entities, holding structures, and trusts across jurisdictions known for specific strengths. For example:
- Trading company: Malta (leveraging favourable double tax treaties)
- Trust establishment: Isle of Man (strong common law protection and trust enforcement)
Migration and Mobility Planning: Evaluate destination countries beyond lifestyle and education. Consider the risks of:
- Political instability or future legislative changes
- Economic volatility or foreign exchange risk
- Civil unrest or high kidnapping/crime rates
Jurisdiction of Governance: Where decisions are made matters. Establishing the family’s governance seat in a stable, well-regulated and internationally respected jurisdiction (e.g. Isle of Man, Jersey) can enhance legal certainty and protect against arbitrary government interference. Regular meetings in such jurisdictions also reinforce strategic alignment.
Avoiding Jurisdictional Concentration: Do not maintain your operating company, bank accounts, investment manager, and data servers all in the same country. This concentration introduces systemic vulnerability. If one jurisdiction faces sanctions, banking restrictions, or civil disruption, the entire structure may be paralysed.
Cyber & Data Risk Management: With cybercrime now surpassing physical theft in both frequency and financial impact, safeguarding data is critical. Distribute hosting, backup systems, and communication platforms across resilient jurisdictions with strong digital infrastructure and cyber laws.
Conclusion
For families committed to securing generational wealth, geo-political risk cannot be ignored. A well-considered risk governance framework, appropriate to the family’s size, structure, and geographical exposure, creates the foundations for long-term resilience.
At Boston Multi Family Office, we specialise in supporting families with the strategic, fiduciary, and governance tools required for navigating complexity. Our presence across the Isle of Man, Jersey, the UK, and Malta positions us ideally to support clients in mitigating jurisdictional and structural concentration risk.
To learn more about how Boston can support your family’s governance and structuring needs, please contact enquiries@bostonmfo.com
We embrace change, thrive in complexity, and remain committed to helping families safeguard their heritage and future prosperity.
[i] USB Global Family Office Report 2023; https://advisors.ubs.com/mediahandler/media/563297/ubs-gfo-report-2023.pdf;