Identification of Risks

Identification of Risks

The first step in risk assessment is the identification of potential risks.

This includes market risk, credit risk, liquidity risk, operational risk, and sector-specific risks.

Each type of risk can have a different impact on various parts of an investment portfolio.

Quantification of Risks

Once risks are identified, the next step is to quantify them.

This involves assessing the likelihood of each risk occurring and the potential impact it could have on the portfolio.

Techniques such as statistical analysis, historical data evaluation, and financial modeling can be used.