Helping the family office protect family wealth
Family offices’ priorities vary widely, but one objective common to all is protecting the family’s wealth. A family office’s approach to managing risk depends on many factors, but a sound framework of internal controls can be essential to risk management — helping to protect family wealth and providing an operational framework on which the office can rely through changing situations.
Internal controls will not prevent every occurrence of error or fraud, but they can be one of a family office’s recognized available tools for mitigating risk and a vital complement to the family’s governance strategy. This article explores some of the questions that families and family offices can consider as they evaluate risk and put in place controls to manage it. The article discusses:
- What internal controls are and why they’re important in a family office environment.
- What a family office can do to evaluate the appropriateness of its existing controls or need for additional controls.
- The importance of and distinction between entity and process controls.
- How risks change over time, and when a family office should re-evaluate its internal controls.
- How the current economic environment may change the need for internal controls.