What is the primary goal of risk management in wealth management?

The primary goal of risk management in wealth management is to identify, assess, and prioritize financial risks. This process is crucial because it enables wealth managers and their clients to recognize potential threats to their financial health and to develop strategies to mitigate those risks effectively. By understanding the nature and level of various risks, wealth managers can tailor investment strategies that both align with their clients' financial goals and suit their risk tolerance.

This approach emphasizes a balanced perspective on risk, acknowledging that while some risks are inherent in investing, they can often be controlled and managed rather than ignored or eliminated. Effective risk management involves not only assessing existing risks but also continuously monitoring and adjusting strategies as the financial landscape changes.