Strategic Risk Management: A Practical Guide to Portfolio Risk Management

Strategic Risk Management: A Practical Guide to Portfolio Risk Management

by David Iverson
Released November 2013
Publisher(s): Wiley
ISBN: 9781118176405

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Book description

A comprehensive guide to the key investment decisions all investors must make and how to manage the risk that entails

Since all investors seek maximize returns balanced against acceptable risks, successful investment management is all about successful risk management. Strategic Risk Management uses that reality as a starting point, showing investors how to make risk management a process rather than just another tool in the investor's kit. The book highlights and explains primary investment risks and shows readers how to manage them across the key areas of any fund, including investment objectives, asset allocation, asset class strategy, and manager selection. With a strong focus on risk management at the time of asset allocation and at the time of implementation, the book offers important guidance for managers of benefit plans, endowments, defined contribution schemes, and family trusts.

  • Offers a thorough examination of the role of risk management in the decision-making process for asset allocation, manager selection, and other duties of fund managers

  • Written by the current head of portfolio design for the New Zealand Superannuation Fund

  • Addresses the fundamental importance of risk management in today's post-crisis fund management landscape

Strategic Risk Management is a comprehensive and easy-to-read guide that identifies the primary risks investors face and reveals how best to manage them.

Table of contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright Page
  5. Dedication
  6. Acknowledgments
  7. Preface
    1. WHAT THIS BOOK OFFERS
    2. IS THIS BOOK FOR YOU?
    3. HOW THE BOOK IS STRUCTURED
  8. Chapter 1: Strategic Risk Management Framework
    1. ORGANIZING FRAMEWORK
    2. WHAT RISKS DOES THE FUND FACE AT EACH LEVEL?
    3. SUMMARY
    4. PUTTING THE IDEAS INTO ACTION
  9. Chapter 2: Governance Risk
    1. WHY GOVERNANCE MATTERS
    2. GOOD GOVERNANCE
    3. SIGNS OF POOR GOVERNANCE
  10. Chapter 3: Investment Beliefs
    1. WHY HAVE INVESTMENT BELIEFS?
    2. KNOWLEDGE AND INVESTMENT BELIEFS
    3. INVESTMENT BELIEFS AND STRATEGY
    4. CATEGORIES OF INVESTMENT BELIEFS
    5. EXAMPLES OF INVESTMENT BELIEFS
    6. APPROACH TO DEVELOPING INVESTMENT BELIEFS
    7. PUTTING THE IDEAS INTO ACTION
  11. Chapter 4: Fund's Purpose
    1. CLEAR DEFINITION
    2. POSSIBLE WAYS TO EXPRESS OBJECTIVES
    3. EXAMPLES
  12. Chapter 5: Strategic Asset Allocation
    1. GUIDING PRINCIPLES
    2. KEY STEPS
    3. CAPITAL MARKET ASSUMPTIONS
    4. CANDIDATE PORTFOLIOS
  13. Chapter 6: Hedge Funds
    1. NOT AN ASSET CLASS
    2. TYPES OF STRATEGIES
    3. CHARACTERISTICS OF HEDGE FUNDS
    4. RISKS OF INVESTING IN HEDGE FUNDS
    5. RISK AND RETURN CHARACTERISTICS
    6. GOOD IMPLEMENTATION
    7. REASONABLE RISK AND RETURN EXPECTATIONS
  14. Chapter 7: Private Equity
    1. TYPES OF PRIVATE EQUITY
    2. STAGES OF INVESTMENT
    3. FEATURES OF PRIVATE EQUITY
    4. RISKS OF PRIVATE EQUITY
    5. MANAGING THE RISKS
    6. FUND OF FUNDS
    7. SUITABILITY FOR AN INVESTOR'S PORTFOLIO
    8. RISK AND RETURN CHARACTERISTICS
    9. REASONABLE RISK AND RETURN EXPECTATIONS
    10. ACHIEVING PRIVATE EQUITY ALLOCATIONS
  15. Chapter 8: Benchmarks
    1. WHAT ARE BENCHMARKS FOR?
    2. CHARACTERISTICS OF GOOD BENCHMARKS
    3. MARKET CAPITALIZATION AND BENCHMARKS
  16. Chapter 9: Tactical Asset Allocation
    1. TACTICAL VERSUS STRATEGIC ASSET ALLOCATION
    2. APPROACHES TO TAA
    3. TAA VERSUS GLOBAL TAA VERSUS DAA
    4. INVESTMENT BELIEFS
    5. CONDITIONS FOR SUCCESS
    6. TAA PROCESS
    7. EVIDENCE OF VALUE ADDED
    8. MARKET TIMING AND TIME OUT OF THE MARKET
    9. GTAA
  17. Chapter 10: Active versus Passive Management
    1. DECISION FRAMEWORK
    2. EVIDENCE ON MARKET EFFICIENCY
    3. WHAT BARRIERS EXIST TO ACCEPTANCE OF THE CONCEPT OF MARKET EFFICIENCY?
  18. Chapter 11: Passive Management
    1. PHYSICAL ALTERNATIVES
    2. SYNTHETIC IMPLEMENTATION
    3. RISK CONSIDERATIONS
    4. OPERATIONAL CONSIDERATIONS
    5. MANAGING RISK WITH DERIVATIVES—AN EXAMPLE OF ALPHA–BETA SEPARATION
  19. Chapter 12: Active Global Equities Structure
    1. ACTIVE RISK AND RETURN
    2. STYLE RISKS
    3. MANAGEMENT STRUCTURE
    4. MARKET EXTENSIONS
  20. Chapter 13: Active Global Fixed Income Structure
    1. STYLE
    2. MANAGEMENT STRUCTURE
    3. MARKET EXTENSIONS
  21. Chapter 14: Manager Selection
    1. HIRING MANAGERS
    2. FIRING MANAGERS
    3. FEES
    4. PERFORMANCE-/INCENTIVE-BASED INVESTMENT MANAGEMENT FEES
  22. Chapter 15: Execution
    1. REBALANCING
    2. TRANSITIONING MANAGERS
  23. Chapter 16: Review and Monitoring
    1. LEVELS OF PERFORMANCE REPORTING
    2. SAMPLE REPORTS
    3. CONCLUSION
  24. Chapter 17: Case Study 1—Defined Benefit Plan
    1. BACKGROUND
    2. FINANCIAL POSITION AND ACTUARIAL VALUATION
    3. ENGAGING AN INVESTMENT ADVISOR
    4. INVESTMENT OBJECTIVES
    5. ASSET ALLOCATION STRATEGY
  25. Chapter 18: Case Study 2—DC Member Investment Choice Fund
    1. PLAN CHARACTERISTICS
    2. REVIEW OF THE PLAN
    3. INVESTMENT OBJECTIVES
    4. FUND DESIGN
    5. INVESTMENT STRATEGY
    6. MANAGER STRUCTURE
  26. References
  27. About the Author
  28. Index

Product information

  • Title: Strategic Risk Management: A Practical Guide to Portfolio Risk Management
  • Author(s): David Iverson
  • Release date: November 2013
  • Publisher(s): Wiley
  • ISBN: 9781118176405