In recent years, risk tools and techniques have grown increasingly mathematical and technical. Yet risk management is much more than just numbers, and must be placed in the context of the broader goals of managing a firm. Of course risk management requires knowledge and appreciation of technical tools, but good risk management means focusing on three important items:
- Management - managing people, processes, institutions. (A seemingly simple idea, but one that was largely ignored in the run-up to the recent financial crisis.)
- Thinking about risk and uncertainty. Unfortunately, as humans we are often poor at thinking about uncertainty. Doing so, however, can have substantial returns.
- Understanding and using quantitative techniques - volatility and VaR, marginal contribution and best hedges. Not so much the technical formulae, but what do these quantitative measures tell us, how can we use them in managing a portfolio?
This is an archived version of a presentation that was recorded on 13 July 2012.