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Post By: admin June 30 2024

How to Manage Risks of High-Net-Worth Businesses with the Assistance of Audit Firms in Dubai?

Potential business firms with high net worth are always challenged to protect and grow their wealth in a competitive market that has multiple risks. The main objective of a business with potential wealth is always to safeguard and expand the wealth without any hindrances. Avoiding such hindrances includes effective detection and management of risks prevailing in the market. In this blog, we will shed light on the importance of risk management and strategies.

Risk Management For High-Net-Worth Businesses

Businesses with high net worth always demand customised risk management services, which can be tailored as per their requirements. The main objective of such risk management approaches is to guard the wealth of the business from unprecedented risks like market fluctuations, inflation, economic depressions, legal changes, and other risks that, in the long term, might reduce the value of the business.

Assessment of Risk for the Businesses

The core of effective risk management lies in the accurate assessment of risks. Once the nature and type of the risk are known, devising strategies for mitigating such risks becomes a piece of cake. Detecting such risks before they occur is an important step that must be done as early as possible. For the assessment of risks, the different types of risks must be known, which include:

  • Market risks: The high-net-worth business must consider its capacity and potential to tolerate the risks. It must also evaluate the investment objectives in order to understand asset allocation, along with the assessment of the instability and uncertainty prevailing in the financial market that might result in various fluctuations in the market.
  • Tax risks: High-net-worth businesses may have a stringent tax framework. Having perfect tax management and compliance with the laws can have a huge impact on the wealth of businesses. This might include proper tax planning and ensuring tax-friendly investments.
  • Longevity risks: High-net-worth businesses may have a long-term goal to be achieved. It might be taken into consideration to ensure proper provision and reserves to face unprecedented circumstances like the closure or liquidation of the business.
  • Liquidity risks: There might be some circumstances where high-net-worth businesses might require liquid funds for operational or other administrative purposes. In such circumstances, investment in non-monetary assets like real- estate, private businesses, etc. can be troublesome. Hence, it is always the best course of action to invest in assets that can be converted to cash easily when required.
  • Inflation risks: The risk of inflation prevails in every economy; it is always best for high-net-worth businesses to invest in assets that give returns higher than the inflation rates.

Risk Assessment Process

The risk assessment process that is to be performed by the businesses includes the following steps:

  1. Identification of the risks prevailing
  2. Analysing the intensity of the risks prevailing
  3. Assessing the impact and the after-effects of the risks
  4. Prioritising the risks based on the circumstances of the business.

Risk Management Strategies for the High-Net-Worth Business

An audit firm in a market like Dubai can assist businesses in getting potential strategies in place to avoid future mishaps. An audit firm with experienced professionals can devise the best risk management strategies that will be suitable for their requirements. Some of the vital strategies include:

  • Avoid: If the business has complete control over the operations, then it can have the option to entirely mitigate and avoid risk even before it is detected by uprooting the risk-causing factors.
  • Reduce: If the risks cannot be mitigated, then the impact of the risks can be controlled and reduced to an extent where it might not cause much harm to the businesses. The audit firms can assist the businesses in implementing various automated solutions to streamline the processes so that the risks can be reduced or mitigated.
  • Accept: If the costs of mitigating risks are greater than the cost of the risks, then it would be feasible to accept such risks.
  • Transfer: The businesses can transfer the risks to third parties through various means, like purchasing insurance plans, etc.

In conclusion, wealthy clients can manage the risks that exist by seeking the assistance of audit firms. The firm can ensure the proper implementation of the strategies and the proper detection of the risks. With the assistance of such audit firms, the risks can be mitigated at the beginning stage itself. Professionals who are well aware of market dynamics and economic demography can devise risk management strategies as per the requirements of their clients.

How Can CDA Help?

CDA, being one of the leading accounting and audit firms in Dubai, has been serving its varied clientele as per their requirements. CDA is known for its custom-tailored audit services, which it provides to business entities to overcome risks and stay ahead of competitors. CDA can help the high-net-worth businesses in Dubai implement a strategic risk assessment framework that facilitates early detection of risks and takes actions to mitigate them. CDA’s professional team can assist in staying compliant with all the audit norms as per the regulation and avoiding future mishaps. To learn more about our audit services, contact us now.