RiskMetrics - Why measure risk?
- Introduction to Risk
- What is Risk?
- Risk and Opportunity
- Risk Preference
- Risk and Performance
- Importance of Risk
- Market Risk
- Event Risk
- Unique vs. systemic risk
- Sources of Risk
- Why Measure Risk?
- Introducing RiskGrades
- Using RiskGrades
Introduction: Why measure risk?
Understand why it's important to measure risk
Quantification of Risk
As you learned in the previous module, you cannot make wise investments without first considering risk. To be successful, every investor must be able to identify and understand the types of risk they face across their entire portfolio. Measuring risk is just as important as measuring returns.
Our objective is to make you a smarter investor by offering the same risk analysis tools used by professional risk managers. Measuring risk on a portfolio basis will show you how well diversified your investments are, where the largest gains and losses are likely to be concentrated, and how your risk profile compares with that of your peers. Ultimately, the greater transparency achieved through measuring risk will help you make more informed investment decisions.
After completing this module, you will be able to:
- Understand the meaning of volatility
- Use the RiskGrade measure to benchmark your investment risk
- Apply the XLoss measure to estimate your potential loss in extreme market conditions