A Different Approach To Equity Risk Management

In developing new solutions to an old problem, whole new avenues can open up just by challenging traditional thinking and purposefully changing your perspective to ask tough questions. Especially in our new business environment of accelerating change, every operating idea needs to be regularly challenged. Not to worry though as good established ideas will always stand up to scrutiny, but stand up they must: Why are we still using this approach? Is there any way we can strengthen or further support what we are doing? Are their new tools or approaches we could use to enhance our methodology? Are there things changing in the markets or investor behavior that we need to address?

Sometimes it is not novelty or something wholly new that drives change, but just a different application of an old idea or looking at something from a different lens to uncover new ways of doing things. This formula of opening up your thinking and developing a different mindset helps you see what others don’t or won’t and allows you to build a path to truly different solutions to problems. Risk management has been going through this evolutionary path since the 2008-9 market downturn where standard risk management definitions and approaches, like Modern Portfolio Theory, seem to be openly under reconstruction and dynamic experimentation.