Family office risk appetite is set to expand over the next 12 months as companies focus on acquisition opportunities amid expectations that inflation and interest rates will fall, new research from Ocorian shows.
Ocorian’s international study among family office investment managers shows investment risk appetite this year is much higher than last year. Almost half (46%) senior executives questioned in the international study say their organisation’s investment risk appetite will increase in the year ahead. That compares with just 8% who said their investment risk appetite increased in the past 12 months.
The key reason for the rise in investment risk appetite in the year ahead is the belief that pricing around deals will become more attractive. One in ten (10%) selected that as one of their top three reasons for an increased investment risk appetite, followed by lower interest rates (10%) and developments around artificial intelligence and technology (8%).
However major concerns identified in the study are global political uncertainty, costs in general increasing and worries that inflation may not fall.
Around 36% of firms whose investment risk appetite is falling cited political uncertainty while 22% highlighted costs in general increasing and 18% highlighted inflation as the reason for their declining risk appetite.
Ocorian’s study found family offices worldwide maintained their focus on risk mitigation over the last 12 months with 48% having increased their overall budget for risk management and 46% expanded EIS schemes. Around 44% have expanded their risk management budget.
Family offices are still very much focused on risk mitigation. Half (50%) will invest more in new technology in order to mitigate risks while 44% plan to expand their risk management budget and 42% will increase their overall budget for risk management.
Paul Spendiff, Head of Business Development – Fund Services, at Ocorian, said: “Investment risk appetite is clearly increasing with senior executives and major investors expecting a shift in global macroeconomic conditions as well as more opportunities for acquisitions at more attractive prices.
“The optimism about the year ahead and growing confidence is tempered by a focus on risk management and there is evidence from the study that companies have invested this year in new technology and risk management staff in order to expand in the year ahead.
“That focus is being maintained and we are seeing growing demand for our services as we help our clients solve these complex issues. In addition there are major concerns about the year ahead ranging from global political uncertainty and heightened global tensions in the Middle East and Ukraine as well as the risk of recession in major economies.”
