Risk management: preparing for a changing world

The effective management of risk has always been at the heart of successful fund management - a maxim that remains unchanged. What has changed, however, is the nature of that risk in a rapidly changing world

I entered fund management over 25 years ago, when certain correlations were a given, and wider, old-world hegemonies went unquestioned. Market machinations would be parcelled into formulae, and the Holy Grail was to beat the benchmark. However, times are changing rapidly, and fund management, in its entirety, should reflect this (or so the theory goes). In the immediate wake of the credit crisis, when we all received a rude awakening, risk as a concept was scrutinised. As tends to be the case with human nature though, complacency sets in as quickly as lessons are forgotten. This meant ho...