Measuring and managing risk

Xudong Fu

Chapter 2 in Understanding Investment Risk and Return, 2025, pp 13-41 from Edward Elgar Publishing

Abstract: Navigating finance's intricate and ever-changing landscape requires a deep understanding of risk and its management. This chapter thoroughly examines various types of risk, such as liquidity risk, regulatory risk, interest rate risk, reinvestment rate risk, price risk, volatility risk, correlation risk, credit (default) risk, counterparty risk, inflation risk, country/political/foreign exchange risk, and risk aggregation. Mastering risk measurement and management is essential for anyone engaged in finance and investing. Adopting a comprehensive and cohesive approach with both quantitative and qualitative methods to risk management allows investors to construct resilient and diversified portfolios capable of enduring the uncertainties and challenges of the financial industries.

Keywords: Liquidity risk; Regulatory risk; Interest rate risk; Credit; Default; Risk; Inflation risk; Exchange risk (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035339716
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