The primary objective of Portfolio Risk Management is to make sure that portfolio components will achieve the best possible success according to the organization’s strategy and business model. From a risk perspective, this is done through the balancing of risks, both positive (opportunities) and negative (threats). The managing of risks below the portfolio level is usually thought of as exploiting opportunities and avoiding threats. However, when dealing with complexity at the portfolio level, the simple approach of avoiding threats and exploiting opportunities may not result in a complete balancing of portfolio risks. Portfolio Risk Management aligns portfolio components, organizational strategy, the business model, and environmental factors toward the objective of portfolio value optimization and results in a synchronized portfolio execution across portfolio components. Risk and change should be embraced and navigated within an environment of nonlinear interactions. Within this nonlinear environment, specific portfolio-level risks are addressed by the portfolio management team with the goal of optimizing value for the organization. Risk and change are thus embraced and navigated within an environment of nonlinear interactions with the goal of maximizing value for the organization.
To learn the Portfolio Risk Management you need:
- Read the chapter ‘Portfolio Risk Management’ in the Standard for Portfolio Management, 4th Edition (Chapter 8).
- Watch the videos:
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