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Our Approach

Risk Management

Limits, stress testing and custody.

PhilosophyLong-Term

The office measures permanent capital loss rather than short-term price movement. Positions are sized so that a severe market event does not change the family's circumstances.

Granite breakwater at dawn
0%
Borrowings against the book
12+ months
Liquidity reserve
3%
Maximum single position

Permanent loss, not volatility

The risks monitored are unrecoverable loss: overpaying for a business whose earnings decline, leverage inside a structure, and being forced to sell into a falling market.

Stress testing

Every new position is tested against three scenarios at once: a deep equity bear market, a recession that halves earnings, and a freeze in credit markets. Counterparty and custodian risk is reviewed annually. Liquid reserves are held in short-dated government and bank paper.

Limits apply in calm markets

Position and leverage limits apply when markets are stable, not only after a drawdown.

Portfolio

Portfolio

The liquidity reserve funds obligations; the real assets sleeve produces contracted cash flow.

Fixed Income & Liquidity Reserve
Credit

Fixed Income & Liquidity Reserve

Short-dated government and bank paper sized to fund twelve months of obligations without forced selling.

Rolling mandateView →
Infrastructure & Real Assets
Real Assets

Infrastructure & Real Assets

Long-life assets with contracted or regulated cash flows, sitting alongside the property and equity books.

Selected positionsView →
Monitoring

Monitoring between reviews

Position sizing is checked before the trade. A holding that would breach the cap is not taken in size.

Liquidity is measured monthly against obligations, including committed capital calls.

Counterparty concentration is reviewed annually with the custodian and broker arrangements.

Deviations are recorded in the quarterly family record with the reason for each.

Scenario testing is re-run for material new positions.

Risk in Detail

Limits, stress tests and custody

How limits are measured and when they may change.

Volatility is the price of owning productive assets. Permanent loss is capital that does not come back.

Measuring the wrong variable leads to selling sound assets because they moved and holding impaired ones because they did not.

A deep equity bear market, a recession that halves the earnings of the businesses owned, and a freeze in credit markets, applied simultaneously.

A position must survive all three and still not require a sale. A holding that works in only two of the three is sized down or not taken.

The reserve covers a minimum of twelve months of operating costs, committed capital calls and known obligations. It is reviewed quarterly.

It is held in short-dated government and bank paper with an independent custodian.

Assets are held with a major independent custodian, separate from any entity that provides advice to the office. Counterparty exposure — banks, brokers and managers — is reviewed annually against concentration limits.

No single counterparty may hold a material share of the book.

At a 3% cap, the total loss of one position does not change the family's circumstances.

The cap is set so that one incorrect judgement does not change the family's circumstances.

Limits are not suspended after a drawdown. A change to a limit is a change to policy and requires family review.

A change to a limit is recorded in the Investment Policy Statement at the annual review.

Speak to the Office

Enquiries about the risk framework

Researchers, advisers and counterparties can write to the office for detail on the framework.

  • Substantive enquiries are answered within two business days.
  • Commercial information is treated as confidential.