RISK MANAGEMENT
Only higher risk may bring big money, but it can also lead to total loss. No risk, however, also brings no return. A solid investment strategy is therefore the key to success and a good night’s sleep.
Risk management is the process of identifying, evaluating and controlling the risk of loss to capital associated with the returns on an investment (R.O.I). Risks or threats to capital can come from a variety of sources, including financial uncertainty, legal liabilities, strategic management failures, accidents or even natural disasters.
However, we would like to specifically address personal risk management strategy. There should always be an understanding of the relevant product in advance. Below we have provided a list of various questions to help you gain an understanding of your investments.
Every investor, business and organisation is at risk of unexpected, damaging events that can cost money, time and energy, or even lead to its ultimate closure. Risk management enables organisations to prepare for the unexpected by minimising and calculating risks and additional costs before they occur.
Ask yourself about your Portfolio
How do you define a maximum loss?
For what amount of capital do I guarantee in the worst case?
Which potential do you see in that companies in future?
What is the risk/reward ratio?
What if a line of business suddenly collapses?
What is the profit/loss ratio of my investment?
What company shares are owned and why?
Are you prepared for a haircut?
What if a pandemic impacts and limits our lives for years?
How many years do you have left to invest?
What has been the return of investment so far?
How flexibel are you and your portfolio?
How much time should I plan for following current news?
What is your maximum loss, or how often can you loose a specific amount?
How do I deal with profits and losses?
How does a product react to market changes?
How balanced is the investment?
Are sufficient capital protection measures in place?
What is the level of deposit insurance?
Has inflation been taken into account?
What if the stock market crashes and unemployment rises abruptly?
How safe are government pension systems?
What products have you used so far?
What is the cost/benefit structure?
How dependent is my investment on external or internal changes and media?
How dependent is my investment on current events?