Risk Management

  • Michael J. Oyster


In this chapter, Oyster cites how risk management can be employed to help achieve investment goals. After citing standard deviation as a primary measure of risk in common economic models, Oyster discusses other risk metrics and shares the concept that risk in investing is not necessarily the variability returns. The risk that most investors should care about is the possibility that capital could be permanently impaired. Cognitive errors and behavioral biases can contribute to this risk. Oyster also describes shortfall risk, the potential of failing to achieve goals. Recognizing that equity risk is common and strong, Oyster shows some methods for hedging it out, along with the shortcomings of doing so. He also discusses some limitations of mean-variance optimizations.

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Michael J. Oyster
    • 1
  1. 1.Chief Investment StrategistCincinnatiUSA

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