Embedded Files
Why, risk management?
Why, risk management?
Risk management is the process of identifying, assessing and controlling threats to an personal or organization's capital and earnings.
These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.
Knowledge of type of risk we can face is important so that we can diversify that risk. Because not all risk can be diversified, so for those we hedge our risk.
Sometimes we take more risk without our knowledge for the same return like in MF investment or new business projects.
Blindly following other people's investment strategy could result in huge loss for you.
Blindly following other people's investment strategy could result in huge loss for you.
- Every individual has different risk with which he/she is comfortable with. When we do not know what could be the maximum drawdown(negative temporary asset value), this whole investment adventure could become mentally taxing or even give huge losses because of bad decision during that phase.
- So, It becomes utmost important that we know all the risk associated with any financial decision we make.
And make sure that either we are comfortable in case whatever risk associated really occur or we have an action plan for it.
Page updated
Google Sites
Report abuse