Geopolitical uncertainty and why diversified custody structures matter

Recent developments in parts of the Middle East are a reminder that geopolitical events can influence markets and investor sentiment.

During periods of uncertainty, investors often revisit a key principle of risk management: diversification. This includes diversification not only across investments, but also across jurisdictions, institutions and custody structures.

Recent reporting suggests that cash positions booked in Switzerland by private individuals and non-bank clients from the UAE have increased by around 40% over the past three years, reflecting a broader global focus on diversification during periods of geopolitical tension.

At Hilbert Investment Solutions, protecting client assets across our offices in the UK, Europe and the Middle East is a core part of how we operate.

Client assets are held separately from the firm’s own assets and subject to strict operational controls, including oversight and regular reconciliation.

An important consideration for firms and investors alike is concentration risk , avoiding excessive reliance on a single jurisdiction, institution or infrastructure.

For this reason, our custody framework is structured across multiple custodians and jurisdictions. This approach helps strengthen operational resilience and ensures that appropriate safeguards are already in place regardless of market conditions.

As part of this structure, we provide custody services through global custodians including BNY Pershing, part of The Bank of New York Mellon Corporation, alongside other custodians regulated in their respective jurisdictions.

Importantly, diversification does not mean withdrawing from any particular region. Financial centres across the Middle East continue to play an important role in global markets and remain key hubs for international capital flows.

Rather, the focus is on ensuring that governance, custody structures and operational controls are robust enough to support clients through changing global conditions.

From a compliance perspective, maintaining these safeguards and providing transparency to clients remains a constant priority.

Disclaimer

This article is provided for general information purposes only and reflects a compliance perspective on current global developments. It does not constitute financial, investment, legal or tax advice. Individuals should seek professional advice before making any investment decisions.

Reference:

https://www.globalbankingandfinance.com/swiss-money-managers-expect-iran-war-increase-inflows-gulf/