In the ever-evolving landscape of financial markets, risk management and risk mitigation are important tools in portfolio advisory. It calls for a broad knowledge of market trends, keen insight into macro and micro risks, and spontaneity in wealth preservation. Letâs explore a 360-degree approach to managing investment portfolio risks, reimagining traditional strategies to navigate the complexities of todayâs investment world.
Understanding portfolio risk management
Portfolio risk management is making investment decisions with a financial objective while considering the limit of endurance of risks. It is about establishing, assessing and addressing risks inherent in a portfolio. The right way to assess risk is by considering the risk tolerance, risk required and risk capacity of an investor. The most important of these is the risk tolerance and risk capacity which delve into the finer aspects of money behaviour of an individual.
The 360-degree approach to risk management is based on the premise that risks associated with investments should be considered from all sides. This includes market risk, credit risk, liquidity force and even reputation. By referring to every factor indicated…
