{"id":247090,"date":"2022-05-16T06:14:14","date_gmt":"2022-05-16T06:14:14","guid":{"rendered":"https:\/\/imarticus.org\/?p=247090"},"modified":"2022-09-22T06:53:13","modified_gmt":"2022-09-22T06:53:13","slug":"not-knowing-risk-management-can-be-risky","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/not-knowing-risk-management-can-be-risky\/","title":{"rendered":"Not Knowing Risk Management Can Be Risky"},"content":{"rendered":"

Not Knowing Risk Management Can Be Risky<\/strong><\/h1>\n

Investment decisions are like a two-sided coin. If one side of investment is in return, the other is a risk. Uncertainty or risk is present in all investment decisions. An investor takes all investment\/portfolio decisions based on his risk-return profile. If you are a conservative investor, you will buy investment assets with low volatility or potential loss probability. If you are an aggressive investor, you will purchase investment assets that have the potential to earn higher returns but are also accompanied by a higher proportion of losses. If you wish to pursue a career in corporate banking<\/a><\/strong> or investment banking, taking risk management courses is essential.<\/span><\/p>\n

Definition of Risk and how risk is measured\u00a0<\/strong><\/h2>\n

When you do risk analysis, you identify, analyze, and accept uncertainty to mitigate them. As mentioned before, risk includes both upside deviations and downside deviations.<\/span><\/p>\n

Measuring Risk<\/strong><\/h2>\n

Risk measurement varies according to the type of financial investment. Here, we analyze the risk associated with stocks, fixed income securities, investing in foreign exchange denominated instruments, and risk arising from companies' operations. The risk associated with each type of investment is analyzed in a separate sub-section.<\/span><\/p>\n

I. There are two measures of risk used in the investment analysis of stocks:<\/b><\/h3>\n