Risk & Return Measurement

Direct Investment Planning Direct Investment Execution Risk & Return MeasurementDirect Investment Oversight

Our clients own multiple asset classes in addition to their direct investments in operating businesses or operating assets.

They often need a risk advisor independent from those managing their assets to identify, measure, monitor and control risks of their overall holdings. Few advisory firms that service business owning families or family offices offer such services.

A growing and profitable operating business is often described as the "goose that lays the golden eggs". Typically owners of such direct investments also have other investments held in various asset classes; often without an effective means to understand or measure risk across all of their holdings. Understanding the trade-offs between risks and returns is key to wealth maintenance and preservation. Many holders of direct investments do not understand and manage risk across their asset classes and investment holdings. While money, time and effort is spent to identify business opportunities or to identify managers that can consistently produce adequate portfolio returns, insufficient to little effort is typically spent to understand the risks of the overall portfolio of assets and investments, the potential loss of wealth and income under stress scenarios, or to independently analyze the risks that accompany the generation of returns.

Our risk measurement services enable our clients to avoid many of the risk management pitfalls that may result in unexpected losses. We deploy a state of the art risk measurement approach to identify, measure, monitor and control risk for the totality of our clients' portfolio, and we periodically monitor any changes in the risk profile. We utilize the risk management process codified by international ISO standards supplemented by our own proprietary tools, and we deliver comprehensive reports that outline for the overall portfolio and for each specific component's concentrations, liquidity risk, return on capital, value at risk, risk sensitivities, and many other risk measures. We also utilize stress testing and scenario analysis consistent with the approach utilized by the largest financial institutions in the US and abroad to estimate how the family wealth and income may change under a variety of scenarios.

As a result our clients better understand the risks in their portfolio, appreciate the trade-offs between expected returns and the risks that they take, and have access to customized metrics that allow them to compare business and investment opportunities on a risk-adjusted basis. Our risk measurement services provide unbiased advice, as we do not offer investment advisory services.