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Risk Management


The Importance of Avoiding Unintended Bets in Your Investment Portfolio
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At the 70th CFA Institute Annual Conference, Robert P. Browne, CFA, CIO at Northern Trust, discussed his team's investment process and warned portfolio managers about understanding the full extent of the implied bets made with their investments.

Is Your Gray Rhino Plan in Place?
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Author Michele Wucker recommended financial professionals spend less time focused on potential black swans and more time addressing gray rhinos — the threats we can see charging right at us.

Book Review: Enterprise Risk Management in Finance
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Providing a general overview of salient topics in risk management, this book is best suited to the experienced risk manager, who can turn to it for technical guidance and a good, succinct refresher on select topics. The beginner would do well to stick with the book’s qualitative discussions, which can serve as useful points of departure for further study.

Where Markets Fail: Markets Are Not Systemic
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Markets are usually not systemic. Instead, from the bird’s-eye perspective of "Capitalism," many businesses are "opportunities" in the same way that it feels good to hit yourself in the head with a hammer: It's much better once you stop.

Progress Interrupted by Populism
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Scarcely any attendees at the 70th CFA Institute Annual Conference thought that the populist tide had peaked and would start subsiding. Panelists Neil Howe, Michala Marcussen, CFA, and Willis Sparks discussed what it meant for global economies.

Book Review: Even the Odds
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A leading analyst and portfolio manager shares her approach to sensible risk taking, which can be applied to anticipating, evaluating, and responding to risks in business, investing, and everyday life.

The Active Equity Renaissance: New Frontiers of Risk
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One modern portfolio theory (MPT) pillar that is unquestionably broken is the use of volatility, specifically standard deviation, as a measure of risk, Jason Voss, CFA, and C. Thomas Howard write in the latest edition of The Active Equity Renaissance series. This initial error in MPT's development is a major contributor to active investment management underperformance.

Shortcuts to Factor Investing: Equities and Beyond
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In the latest installment of his Shortcuts to Factor Investing series, Mark Harrison, CFA, takes a deeper dive into equities and factor investing's wider applications to other asset classes, including fixed income.

Cyber Threats: Can Financial Firms Maneuver Fast Enough?
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As a core part of the critical economic infrastructure, financial firms offer a prime target for adversaries who want to steal data and funds or even to disrupt the industry. Financial firms effectively have fallen behind in a cyber arms race, and the magnitude of risk has vastly increased, with organized crime and state-sponsored attacks becoming more active and powerful. But financial professionals may have a surprising ability to adapt.

Where Markets Fail: Markets Assume Fungibility
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Markets are useful but imperfect, says Jason Voss, CFA. One imperfection is that they assume fungibility. Assuming that a dollar spent on one thing is equivalent to a dollar spent on something else has serious consequences for investors.