Sarah Oliver, Chief Financial Officer of Rex Encore LLC, has asserted that in most family offices, the role of chief risk officer is effectively already embedded within the CFO function. According to her, the structure of many family offices does not require a separate risk executive, as CFOs already oversee the financial, operational, and governance dimensions critical to managing risk.
Oliver explained that CFOs sit at the center of decision-making, managing everything from cash flows and debt obligations to capital commitments and portfolio performance. This vantage point, she said, enables them to connect financial data with operational realities, creating a more integrated and actionable approach to risk management than a standalone role might achieve.
She highlighted that while family offices often concentrate investments in private markets—such as private equity, real estate, and operating businesses—to enhance control and reduce costs, this strategy introduces risks that are frequently underestimated. According to Oliver, private assets, though perceived as diversification tools, can behave similarly to public markets during periods of stress, particularly when liquidity constraints arise.
“In times of market disruption, liquidity becomes the defining risk,” she noted, pointing out that delayed distributions, increased capital calls, and limited exit opportunities can converge, placing significant strain on portfolios. She warned that traditional cash forecasts often fail to capture these overlapping pressures, leaving family offices exposed during critical periods.
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To address these vulnerabilities, Oliver outlined four essential practices that CFOs should lead: liquidity stress testing, scenario planning, counterparty risk evaluation, and operational risk oversight. She emphasized that these do not require overly complex systems but rather disciplined execution and a unified approach to monitoring both financial and non-financial indicators.
Beyond technical measures, Oliver stressed the importance of governance, noting that effective risk management depends on empowering CFOs with clear authority, access to decision-makers, and structured escalation processes. She added that leadership must foster a culture where identifying risks is encouraged and treated as a strategic advantage rather than a disruption.
In today’s increasingly complex private market environment, Oliver concluded that the CFO’s role has evolved beyond traditional finance responsibilities. Instead, it has become central to preserving a family office’s greatest strength—the ability to act independently and make informed decisions on its own terms, regardless of market conditions.
