RiskMetrics - Conclusion
Learn how to be an intelligent risk taker
"The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity."
We need not fear risk or be passive victims of it. Risk is a natural part of this world, and indeed, risk can present great opportunities for those who understand and know how to manage it. Courtesy of long lineage of thinkers, we now have powerful ways to analyze risks and make prudent decisions about the future. We can identify and measure different types of risk, and decide which ones to take and which ones to avoid.
In this module, you learned that you need to be clear about investment objectives, time horizons, and risk preferences when analyzing risks. You should know that you take risk only if you can understand and measure it, and live with its downside. You also know that the returns must justify the potential downside of risk taking.
You should now be able to:
- Define and conceptualize risk
- Explore the relationship between risk and opportunity
- Understand your own risk preference
- Identify, understand, and classify different types of financial risk
Congratulations, you have just completed the first step in the continuous cycle of risk management: understanding and identifying risk. Click on the button below labeled "Next" to begin Module 3, Measuring Risk.