Riskology: hedge funds and banks can learn from each other

Banks should have more risk transparency, hedge funds more formal risk management


Both banks and hedge funds recognise the management of risk as a central business imperative. At a high level, all firms that manage financial assets share a key objective of risk management: to better structure a portfolio of trading securities and/or investment positions to minimise risk taken relative to return obtained. Major sub-objectives are also similar, such as providing analytics that make the nature and size of the main risks embedded in the portfolio reasonably transparent. Also, at