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Technical Publications

Adaptive Risk Management

12 Dec 2012

In an article on Adaptive Risk Management, Tyler Kim, CIO, presents a new approach to risk management. Generic, static risk measurement templates can create a false sense of comfort.  Institutional investors must go beyond tactical risk management objectives such as transparency and focus on a goal that is more directly aligned to the end result they are seeking – insight into the right set of risk exposures that will allow them to make timely adjustments to their portfolios to optimize performance.  Achieving this goal will require changes to the way risk is defined and discussed by all parties concerned. A regular risk dialogue can have a direct, positive impact on investment performance.  If risks are well understood by all parties concerned, obtaining the buy-in necessary to mobilize capital in response to new opportunities (and threats) becomes a much faster process.  In dynamic and unpredictable markets, increased dexterity and responsiveness create significant advantage.