9 Rules of Risk Management
- Joshua M Brown
- April 29th, 2014
This is a list of risk rules posted on the office wall of a senior investment bank risk manager, sent in from a reader. I really liked it a lot, it has broad applications for all of us. – JB
1. There is no return without risk
Rewards go to those who take risk
2. Be transparent
Risk should be fully understood
3. Seek experience
Risk is measured and managed by people, not mathematical models
4. Know what you don’t know
Question the assumptions you make
Risk should be discussed openly
Multiple risks will produce more consistent rewards
7. Show discipline
A consistent and rigorous approach will beat a constantly changing strategy
8. Use common sense
It is better to be approximately right than precisely wrong
9. Return is only half the equation
The risk as well as the return needs to be considered when making decisions.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.