How Do Financial Services Firms Assess and Manage Investment Risks?
Investment risks are inherent in the financial markets, and managing them effectively is crucial for the success of any investment strategy. Financial services firms play a pivotal role in this process, employing various methods to assess and mitigate risks on behalf of their clients. This blog explores the key strategies and considerations involved in assessing and managing investment risks, with insights into best practices and the role of firms like SA Capital Partners. Understanding Investment Risks Many variables might have a negative impact on an investment portfolio’s performance, and they are known as investment risks. These risks include market risk, which arises from fluctuations in market prices; credit risk, associated with the potential default of borrowers; liquidity risk, related to the ease of buying or selling assets; and geopolitical risk, stemming from political instability or economic downturns. 1. Risk Assessment Methods Financial services firms such as SA Capit