Investment Risk

Institutional and retail customers, regulators and auditors, as well as the press and consumer groups, need to be confident that their money is professionally managed. Risk management is a critical discipline in the investment business.

This course will help more employees, particularly those between an introductory and intermediate level, to understand the nature and management of investment risk. It will appeal to those who are not risk experts but need to know how investment risk fits into the broader risk management processes and the different functions within the business. It will also help attendees ask appropriate questions regarding investment risk in the context of their own role and to understand and interpret the reports generated by the investment risk team.

The programme is practical in nature and includes a case study, with examples and exercises used throughout.

Key Learning Objectives:

• Understand the major investment risk metrics and how they are relevant to different types of funds and asset classes
• Be able to analyse risk metrics and understand the relationship between the different values presented
• Discuss key issues in managing fund liquidity
• Be aware of the content of investment risk reports and how to interpret them
• Explore investment risk modelling and oversight, and how these fit into the risk management process

09:30 Introduction: background to the workshop and introduction to the course objectives

09:40 Overview - the nature of investment risk:

• Definition and sources of risk
• Identifying and monitoring investment risk
• How investment risk fits in the risk management process

10:00 Key risk metrics: understanding the key measures used, which funds they should be used for and what the metrics tell you

• Standard deviation of total returns and tracking error
• Value at risk (VaR)
• Review of sample VaR report

11:00 Morning break

11:15 Overview of key risk metrics continued:

• Beta, active share
• Correlation, R-squared
• Duration, credit risk
• Drawdown
• Leverage, gross method and commitment approach
• Review of risk report

12:30 Using derivatives to manage risk

13:00 Lunch

13:45 Liquidity Risk:

• What is liquidity risk?
• Can liquidity risk be measured?
• Case study in mismanagement of liquidity risk - group discussion 
• Strategies particularly vulnerable to liquidity risk

14:30  Investment risk oversight

• Board responsibilities
• Management responsibilities
• Regulatory role

15:15 Afternoon break

15:30 Stress testing:

• What-if analysis and scenario approach

16:00 Risk-adjusted returns:

• Trade-off between risk and return
• Sharpe ratio, information ratio and alpha

16:30 Case Study:

• Analysis of report on performance of fund

17:00 Course conclusion

This training course is run under the Chatham House Rule, for reference please see here

All management and supervisory level staff within investment management firms who need to understand investment risk. This might include managers, supervisors or specialists from the following activities:

• Marketing/Sales and Business Development
• Investment Management
• Customer Support and Reporting
• Distributor Relationship Management
• Investment Operations and Administration
• Risk, Compliance, Audit and Legal

It may also be relevant for specialists from organisations which support and/or supply services to investment management firms such as:

• Third Party Administrators
• Consultants
• Professional Services Advisers
• Regulators

Clive Lang

Clive has over 30 years’ experience working in the financial sector, specializing in quantitative methods, and now uses that experience to help train young people entering the financial industry and through his consulting business to assist companies/organizations to develop, prosper and grow.

Clive provides consultancy and training services on a range of financial topics, including investment and enterprise risk management, multi-jurisdictional insolvency of hedge funds, the formation of investment management funds, management companies including the set up and management of Shariah compliant investment schemes. Clive also works as an associate with other consulting and advisory firms.

Prior to establishing his own consultancy, Clive was the Chief Risk Officer and Head of Compliance at Peak Partners SA, Geneva. Before that he held various senior investment roles including Principal/Consultant at Amiri Capital Services Limited, Managing Director at Merrill Lynch Investment Managers, MD & Chief Investment Officer at PanAgora Asset Management, senior investment manager at both Robert Fleming Investment Management and at County NatWest Investment Management.

IA Member £645.00 +VAT
Non-Member £795.00 +VAT

Pay using a credit card online, or if you wish to be invoiced please email your full details to: Training@theia.org

PLEASE NOTE: Full payment for the course must be made prior to the course commencement date.

• Any cancellation must be made in writing.
• For all cancellation received 15-30 days prior to the course start date, 50% of the course fee is still payable.
• No refund is given for a cancellation made 14 days or less prior to the commencement of a course.
• Transferring from one course to another is treated as a cancellation. You can substitute one delegate for another at no additional cost. In this instance, please give two business days’ notice.

Hybrid Training Courses:

Hybrid deliveries of our training allows participants on our courses the option to attend in-person here from our offices at Camomile Court, or you can attend virtually via MS Teams.

Please be advised a training course could change from hybrid delivery to solely virtual delivery. In such an event, we will inform delegates at least one week prior to the course delivery date.

There are a limited number of in-person spaces available on this course and this will be allocated on a first come first served basis.