Risk Analysis

Risk Analysis

Managing risk is what a fund manager does. 

That may sound obvious to some, or far fetched for others.  Surely a fund manager’s role is to maximise return?  Richard Harris says, “It certainly is not to minimise risk – but the longer that I spent in fund management, the more I realised that maximising return is a given.  My key role was to manage the risk associated with that return”.

Risk assessment is qualitative – looking at fundamentals, valuations and liquidity or it may be quantitative – such as measures of volatility over time

Most fund managers get into trouble by not managing their risk – and thinking that they are brilliant when all that has happened is that the market has gone up.  Mr Harris, “I have now seen four BIG bear markets over the years.  That is when risk analysis and management pays off.”


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