Risk Management
topic on 7 shows · 20 statements across 20 episodes
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20 statements about Risk Management, every show
Managing only to tail-risk stress scenarios prevents taking sufficient day-to-day risk
“We're looking at that separately from our day-to-day expectations of how the returns are going to correlate, because if we only look at those stress scenarios, we won't take enough risk on the day-to-day.”
Danieli: Most investing alpha comes from portfolio and risk management
“My biggest investment pet peeve is when people focus only on the investments themselves. They forget that that's just one third the job. Most of the alpha in the business of investing, I believe, comes from portfolio management and from risk management. These …”
Jain: Top-down macro should only reduce risk, never justify adding it
“One crisis after the other, as I've evolved over the years, it's become where top-down is a risk management tool, and we use it heavily. It's a switch off, not switch on. It should help you reduce risk, but not add risk. In other words, if Chinese growth is go…”
Blankfein: Institutional risk management relies on contingency planning, not predicting the future
“Most of what we do with respect to risk is not so much predicting, it's a lot of contingency planning.”
Human Capital Work Is Risk Management Disguised as Empathy
“It's my sincere belief that human capital work is risk management disguised as empathy.”
Jain: Cutting risk during stress lets funds trade on offense post-crisis
“I view it as the reason you're cutting risk in a time of stress is it might get worse. So you're trying to hedge. The bad news is you're locking in a bunch of losses. And you're paying a bunch of transaction costs. The good news is, when things settle down, wh…”
Sundheim: Managing risk after a position moves destroys capital
“Risk management cannot happen after the fact. Like, anything you do after the fact is not risk management. It's actually just destroying capital. Risk management has to happen before the fact. Meaning, like, you size these positions so that, like, When it goes…”
Auby: Pension risk management is about efficient deployment, not existential survival
“What it shifts from is not so much catastrophic risk, not so much existential risk, Run on the bank type risks. It turns into more, how do you most efficiently use risk, most efficiently deploy it?”
Hoffman: Founders should tackle existential risks before peripheral ones
“In fact, I'd say when you're assessing your risks, you actually want to take on the ones that are most central to killing you as early as possible. If you're worrying about peripheral risks without addressing the essential ones, it's like worrying about what m…”
Fixed volatility budgets force endowment managers to sell low and buy high
“A lot of people out there in our business think about the average endowment portfolio should have 10% standard deviation around its annual returns, 10% volatility budget, which makes no sense, because what happens when markets go down, volatility goes up, all …”
Khajuria: Conservative internal risk management prevents systemic risk in private equity
“We're not seeing systemic problems with private equity. There are very few that go bust. And I think not just because of the corporate veil point, but I think also just the way their own risk management is set up. It's inherently very conservative.”
Multiple investment risks compound rather than adding together linearly
“One risk plus another risk is not just the equivalent of two risks, but it compounds.”
Sacks: 2023 banking crisis wouldn't happen if banks prioritized risk over ESG
“What I would say for sure is that if these banks have spent as much time on risk management as they did on ESG or on woke, then this crisis wouldn't happen.”
Stanley McChrystal: Risk Equals Threats Multiplied by Internal Vulnerabilities
“If you think of it as threats times vulnerabilities equals risk, then you suddenly realize that threats are things that are out there that are inevitably coming our way in most cases, and then our vulnerability to them. And so if we can drive threats down low …”
During market crashes, ensure managers remain engaged and take calculated risks
“I always remember like in big drawdowns, like in March after the COVID was starting to happen, the March drawdown, you want to make sure your manager is sitting back up on their chair and looking at their screen rather than under their desk, and so I'm always …”
Braga: Unwinding during drawdowns stems from poor upstream risk sizing
“Career-wise, in the running of the various strategies that we have run over the years, the mistakes that I have made, which I regret, have Almost all of them probably being related to unwinding strategies in the drawdown. Then you say, okay, what is the mistak…”
Williams: Institutions unable to measure risk default to taking less risk
“So, so if you can't really measure where you are in terms of risk, And that means you can't really manage it. What you would tend to do, and a lot of organizations tend to do, is err on the side of less risk.”
Board diversity improves corporate risk management and capital allocation decisions
“Is there diversity on the board? Again, not because it's the right thing to do, because it's the right business thing to do. It leads to better risk management. It leads to better capital allocation.”
Peters: Investors will stop worrying about tail risk within 3 to 5 years
“And then I guarantee you in three or five years, people won't be that worried about stuff like that anymore.”
Tresidder: Wealth creation requires creating higher lows through active risk management
“The game is just as much risk management as it is how fast you can compound it.
And so you've got to have risk management.
The game is to constantly create higher highs and higher lows.
And you only do that through smart risk management.”