Communicating portfolio risk intuitively and effectively

Unlike returns and most other metrics in use in financial services, portfolio risk is not the sum of the risks of its parts. What is needed is a clear and compact system to show how risk behaves

A vision for making sense of portfolio risks

If only it were easier to explain risk. Having a simpler and more intuitive way to talk about a fund’s risk would encourage transparent dialogue and enable more investors to better understand the dynamics of their own portfolios.

Current conversations are frequently cumbersome and ineffective, partially because risk measures are often difficult to explain and even harder to interpret properly. To complicate matters risk numbers are not well behaved: they do not add up the way people expect.


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