The Risk of Trading: Mastering the Most Important Element in Financial Speculation

BUSINESS IMPACT ANALYSIS

So how does one go about assessing one's restoration time objective (RTO) needs? Trading firms, funds, and props generally obtain the use of a professional risk manager or consulting firm specializing in business continuity risk management. Individual traders or small groups can attempt to determine their personal RTO requirements. Let us walk through the process together. The first step in determining your RTO is to assess your current needs and dependencies.

Functions—List the current functions of your trading business. Your continuous ability to trade is a good start. Trade journal data entry and KPI analysis are a critical part of the risk-based approach if you decide to pursue such a method. Other functions may include coaching, accounting/tax management, monthly reporting, and so on. Trading partnerships or other entities can also include Web hosting, marketing, disclosure, legal, regulatory functions, staffing, compensation and benefits, and benchmarking, to name just a few.

Assets—List all of your assets required in order to perform your role as a trader in your trading business. Technical hardware such as your computer is an obvious priority for many. Others may include your workspace, trade journal software, licenses, and so on.

Resources—Including but not limited to market data feed, broker, coach, other human resources, capital sources, educational vendors, and trading “network” of individuals.

As you create your list of needs and dependencies, ...