- CFA Exams
- 2024 Level I
- Topic 3. Portfolio Management
- Learning Module 6. Introduction to Risk Management
- Subject 1. The Risk Management Process
Subject 1. The Risk Management Process PDF Download
Risk is exposure to uncertainty. In investment, risk includes the possibility of losses.
Taking risks is an active choice by institutions and individuals. Risks must be carefully understood, chosen, and well-managed.
Risk exposure is the extent to which an entity's value may be affected through sensitivity to underlying risks.
Risk management is a process that defines risk tolerance and measures, monitors, and modifies risks to put them in line with that tolerance.
- It is NOT about minimizing, avoiding or predicting risks.
- It is about understanding, measuring, monitoring, and modifying risks.
A risk management framework is the infrastructure, processes, and analytics needed to support effective risk management. It includes:
User Contributed Comments 3
|Lambo83||Where does Risk Budgeting fit in precisely? Is it the same thing as Risk Monitoring, mitigation and management?|
|jam2del||This is quite frankly a very vague reading.|
|Onamav||does anyone know something like Enterprise Risk Management|
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