Risk Management and Asset Allocation
Risk: one word, but not one number
The risks residing within any investment portfolio can arise from a variety of sources and assume a number of forms. Although risk can be variously defined, borrowing from Donald Rumsfeld's infamous “knowns and unknowns” quote, a well-prepared investor must not only factor in the risks that are known and are readily quantifiable, but also the known unknowns – those risks that are not so easily forecasted and calibrated. Then there are the unknown unknowns – those potentially cataclysmic events that cannot always be anticipated, but whose impact can be truly devastating. Throughout this learning topic you’ll find a variety of resources that explore the key sources of investment risk, their measurement, minimisation and control. As always, please email us with any comments or questions you may have at: firstname.lastname@example.org. We’d be delighted to hear from you.
Understanding Risk Measures and Loss Aversion
Portfolio Theory and Volatility Targeting
Understanding the Information Ratio