Risk management continued
Principal risks continued Definition
Key risks identified by the risk management framework
Change since last year
Rationale for change
5. Liquidity risk The risk that assets are insufficiently liquid and/or Brooks Macdonald does not have sufficient liquidity resources available to meet liabilities as they fall due or can only secure such resources at excessive cost. Liquidity risk also includes the risk that the Group is unable to meet liquidity ratios. 6. Market risk The risk that arises from fluctuations in the value of, or income arising from, movements in equity, bonds or other traded markets, interest rates or foreign exchange rates that have a financial impact. 7. Operational risk The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. 8. Cyber risk The risk of a malicious attack by individuals or organisations attempting to gain access to the Company’s network to corrupt data, disrupt and steal confidential information. 9. Legislation and regulatory risk Legislation and regulatory risk is defined as the risk of exposure to legal or regulatory penalties, financial forfeiture and material loss due to failure to act in accordance with industry laws and regulations.
• Corporate cash deposited with external banks • Client cash deposited with external banks • Failed trades • Indirect liquidity risk associated with client portfolios • Indirect liquidity risks associated with dealing • Indirect risk in respect of the liquidity of individual holdings in a fund • Indirect risk in respect of the overall liquidity of our funds • Failed trades • Indirect market risk associated with advising on client portfolios • Indirect market risks associated with dealing • Indirect market risk associated with managing client portfolios
Unchanged →
The risk remains unchanged. The Group continues to maintain liquidity resources above its minimum regulatory requirement and internal thresholds. The Group regularly monitors forecast against actual cash flows and matches the maturity profiles of financial assets and liabilities. The Group has robust contingency funding arrangements, which are tested on a periodic basis. The risk has increased. Market risk is at a heightened level, due to the relatively unstable political landscape and ongoing conflicts in Ukraine and the Middle East. The risk remains unchanged. The Group continues to monitor and enhance its oversight framework to mitigate any external threats brought about by the current geopolitical environment, coupled with idiosyncratic risks linked to the Group’s transition to a new operating model.
Increased ↑
• Financial control • Change • IT infrastructure • Operational resilience • Third parties • People • Suitability
Unchanged →
• Cyber
Unchanged →
The risk remains unchanged. The cyber threat landscape remains at a heightened level (unchanged, year on year), with a high volume of sophisticated cyber threat activity.
• Regulatory • Legal • Tax
Unchanged →
This risk remains unchanged. The regulatory landscape and focus on the wealth management industry has not changed.
56 Brooks Macdonald Group plc Annual Report and Accounts 2025 Brooks Macdonald Group plc 56
Made with FlippingBook - professional solution for displaying marketing and sales documents online