What is concentration risk in family offices
Concentration risk refers to the potential for significant financial loss within a family office due to holding a large position in a single asset or market segment. This risk arises when investments are not sufficiently diversified, making the portfolio vulnerable to adverse movements in that particular asset or segment.
Managing concentration risk in family offices
Family offices can manage concentration risk by diversifying their investment portfolios across various asset classes, sectors, and geographies. Implementing strategic asset allocation and regularly reviewing investment positions can also help mitigate this risk.
