Risk Management

We have a very exacting approach to risk management. In fact, we regularly analyse risk parameters across all areas of our business, and we do so because we believe well-managed risk leads to improved performance. Let's start by exploring what risk management is, and what creates investment risk for individuals and institutions.

Risk Management

Standard Definition

Investment risks can be defined as the probability or likelihood of the occurrence of losses, relative to the expected return on any particular investment. Put simply, risk is a measure of the level of uncertainty of achieving the returns investors expect from an individual investment, or one's whole portfolio.

Risk Management

Our Definition

Diversify your investments, and spread your risk.

 

In other words: How much are you willing to risk losing, if things don’t go as you expect? This is a very important assessment to make before investing in anything, specifically: Will it change your life significantly? Will it prevent you from being able to pay your bills? If the answer is yes, then don’t invest heavily in medium or high-risk programs.

In Fact. Don’t invest all your money in high-risk or even medium-risk programs. Always look to diversify your investments and spread your risk.

How to Assess Investments

Standard Definition

The first step in risk management is called the risk assessment and analysis stage. A risk assessment evaluates an organization's exposure to uncertain events that could impact its day-to-day operations, and estimates the damage those events could have on their revenue and reputation should they occur.

How to Assess Investments

Our Definition

After evaluating the questions below, you can start looking into products and the company’s approach to investment risk management.

01: What do I know about the people and the company I’m trusting my investments with?

02: Do the people and the firm itself possess the integrity to recommend investments suited to my situation?

03: Are they investing alongside me?

04: Have they been in financial services long enough to deserve my trust?

05: Do they have the experience and knowledge I need to make the right investment decisions?

06: Are they aggressive sales people, overselling their products?

5 Traditional Steps to Risk Management

  1. Evaluate the risk if everything were to go wrong
  2. Analyze the risk to see if you are prepared to invest at that level?
  3. Evaluate or rank the risk: low – medium – high
  4. Assess each investment risk against the risk to your overall portfolio
  5. Monitor and review the risk regularly

5 Crucial Characteristics of Risk Management

  1. Exercise professional skepticism
  2. Risk management should protect value, but you should also consider other opportunities. Is it worth taking the risk, or are there alternatives that could deliver the results you want to achieve with less risk?
  3. Manage risks with objectivity – leave your emotions at the door
  4. Readiness to adapt your investments to changes in your situation as well as to developments to your overall portfolio
  5. Risk management must be proactive, and regularly reviewed and updated to reflect changes to your goals, or to capitalize on trends as they emerge.

Risk Profiles According to Investment Class