Risk Management: Foundations for a Changing Financial World

FOREWORD

Although risk management has always been an integral part of the investment management process, it has certainly become more prominent in recent years. By properly measuring and managing risk, the needs of clients and firms can be more effectively addressed. As the ever-evolving financial markets become more sophisticated and challenging, the application of risk management techniques must also evolve. This book traces that evolution from the perspective of some of the greatest minds in the investment management business.

The 53 individual chapters included in this book highlight two decades of risk management thought. They are taken from the Research Foundation of CFA Institute, Financial Analysts Journal, and CFA Institute conference proceedings series. The pieces represent works by Nobel Prize winners, industry legends, and a host of insightful academics and practitioners. The reader will be struck by the timelessness of the principles: An article written in the throes of the 1997 Asian currency crisis could easily be mistaken for one written after the most recent global financial meltdown.

The chapters are organized into three main sections. The first section provides an introduction and overview of risk management thought. The second section, which investigates the measurement of risk, focuses on risk modeling; it addresses such topics as value at risk, risk budgeting, and liquidity risk. The third section concentrates on risk management and issues related to asset ...