Anderson A Delicate Balance - buy-side risk management systems feature

Risk management on the buy side has, over the course of the last few years, become a specialist business process in its own right. But there are still a myriad approaches to essentially the same challenge: ensuring that you do not expose your organisation (and your clients) to unnecessary levels of risk, while taking calculated risks in order to meet your performance objectives. It's a delicate balance.

Risk management has come to mean a lot of things to many different people across the buy side; long-only investment managers have an entirely different view of risk compared with day traders and hedge fund managers. There are two reasons for this: volatility and a firm's investment horizon. Generally, the more volatile the markets, the more active a buy-side organisation is in managing its risk.

An example of this would be a typical hedge fund manager investing in emerging markets or certain