Riskology: hedge funds and banks can learn from each other
The differing roles of risk management at banks and hedge funds are not incompatible
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
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