Risk management is the ability of an organization to control the risks involved in managing the assets of the enterprise. For individual portfolio management, the ability to control risk by Y H & C is handled with a few different methods-
First, I create an investment policy statement in order to have a concrete plan entailing the objectives and constraints involved for the investor. Included in the plan is the identification of the risk tolerance of the client, (who might be a person, company, or organization).
Second, I develop a strategic asset allocation and tactical asset allocation model which fits the risk profile of the investor. Third, I diversify the assets we purchase according to the allocation models. Fourth, I strive to buy assets at prices which I consider to be fair – an asset well bought is half sold. Fifth, if necessary and appropriate for the investor, I can use options, foreign currency, and indexes to hedge underlying positions.
