Risk Management in Asset Management
The Growth of Risk Management: A History, 2003
17 Pages Posted: 30 Jul 2009
Date Written: January 17, 2003
Investors are natural risk bearers, in part due to the vast array of risk management tools available to them. These tools allow a risk budgeting process that de-couples the asset allocation and active bets taken in the portfolio. The risk of non-traded assets in the portfolio can be reduced by selective hedging and insurance products. Non-traded assets and a dynamic risk/return tradeoff lead to horizon specific asset allocation. Portfolios should be constructed to account for the systematic shifts in asset liquidity.
Keywords: risk management, asset management
JEL Classification: G1, G11
Suggested Citation: Suggested Citation