Discussion - Balancing Risk and Return
"Only those who will risk going too far can possibly find out how far one can go." T. S. Eliot
"Risk comes from not knowing what you're doing." Warren Buffett
Risk Managers (RM) can add tremendous value to a company's profile. Consider the many types of risk such as Market, Interest Rate, Inflation, Credit, and Liquidity Risk. The RM can identify and plan toward a balanced future.
How much diversification can help? The best performing assets should offset the worst performing ones. Is this true in most businesses? Consider investment portfolios, hardware store inventory, restaurant menu items, and even political platforms.
Can the risk of an unpopular position, precarious investment, or unsupported decision be worth the return?