Analyze Portfolio Risks
Abstract
It is necessary to work through four aspects of Portfolio Risk Management to control the risks a portfolio is affected by. The various aspects are identification, analysis, development responses and monitoring and control. The identification is important, there are several ways of during this, for instants documentation reviews, information gathering techniques, checklist analysis and diagram techniques[1]. The Portfolio risk register must be analyzed. This wiki article will focus on the tool and techniques regarding the analysis. There are to areas of the analysis, which is the risk probability and impact assessment and the risk combining and modeling techniques. The risk probability and impact assessment can be handled by different tools. The tools normally used are interviews, probability distributions, probability and impact matrix and financial analysis tools *. The risk combining and modeling techniques consists of a sensitivity analysis and a modeling simulation. When the analysis has been made, the portfolio manager should find some suited responses. The portfolio manager might have to make a strategic response or a scenario analysis. It is also important to make fallback plans and know which risks to ignore. The portfolio manager makes an iterative update on the portfolio management plan, risk register and list of components. In the end the risks will be monitored and controlled by dedicated managers. The managers will observe the risk development, act if needed and update information for future use.
* Im not really sure, if I should focus on this specific topic (financial analysis tools). This and a couple more. Or if I should describe the entire analysis in form of a process.
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