Risk Management Guides For Investors

Risk Management practice perhaps is the first things to consider when it comes to investment. See a list below on a comprehensive set of articles covering risk drivers ranging from political, macro and market related risks. Ultimately, the concept of risk in investment requires investors to carefully weigh the potential rewards against the potential risks, and to develop a strategy that aligns with their financial goals and risk tolerance.

The Impact of Macro-Economy

Investors typically consider various macroeconomic indicators such as inflation, economic growth, and monetary policy when deciding where to allocate their resources.

The Impact of Market Risk

Market risk refers to the potential for an investment to experience losses due to changes in market conditions, such as fluctuations in interest rates, currency exchange rates, and the overall performance of financial markets. This type of risk can impact all types of investments, including stocks, bonds, mutual funds, and other securities.

The Impact of Global Trades

Global trade can have a significant impact on stock prices, as it can affect the revenue and earnings of companies that engage in international business. When there is a surge in global demand for a particular product or service, companies that produce or provide those goods or services may experience a boost in their profits, leading to an increase in their stock prices.

The Impact of Monetary Policy / The FED

The Federal Reserve (the Fed) can affect stock prices through its monetary policy decisions. The Fed has the power to influence interest rates, which in turn affects borrowing costs for businesses and consumers. When the Fed lowers interest rates, borrowing costs decrease, making it easier and cheaper for businesses to borrow money to invest in their operations, expand, or hire more employees. This can lead to increased profits, which can drive up stock prices.

Helpful Educational Sources

Below listed a few useful resources, data services and organizations that focus on investment risk.

  • Coursera free online courses on risk management covers topics like how to quantify risk-to-reward using Treynor Ratio, and calculate the value at risk for investment To take this course, it is required that you are familiar basic financial risk management concepts. You can gain them by taking the guided project Compare Stock Returns with Google Sheets. https://www.coursera.org/projects/investment-risk-management
  • Global Association of Risk Professions (GARP) is a not-for-profit organization and a membership association for risk managers. Its services include setting standards, training, education, industry networking, and promoting risk management practices. https://www.garp.org/
  • FINRA plays a critical role in ensuring the integrity of America’s financial system—all at no cost to taxpayers. Working under the supervision of the Securities and Exchange Commission. Investor education is also one objective of FINRA. https://www.finra.org/investors/investing/investing-basics/risk