How does the Risk Management Framework work?
Investing in equity is associated with a certain amount of risk. Also it is the well-known fact that higher risk can fetch higher returns. But taking too much risk without being cognizant of the consequences can negatively impact the portfolio. Hence it is important to know the risk and take steps to manage it.
Risk management framework is the process which allows us to balance the risk. With it, we can identify the existing and potential risks to the business and plan accordingly to manage them in a prudent manner. This is a very vital process that protects the invested capital and maximises our odds to fetch better risk-adjusted returns.
Though the risk management framework does not reduce the risk to zero, managing these risks by taking informed decisions definitely cuts down the risk to a larger extent. Hence it is extremely essential to implement this strategy carefully before investing in the stock market.
“Risk comes from not knowing what you’re doing” – Warren Buffet
The Brighter Mind Approach
We, at Brighter Mind, design our portfolio in such a way so as to get better returns with minimal risks. Our team continuously strives to manage the risks effectively so as to provide maximum protection to the invested capital.
To achieve the minimal risk to our portfolio, we have developed our own risk management framework. This includes identification of risk, measuring and monitoring such risks, and mitigating these risks promptly. Our risk management framework adds immense value in strategizing our portfolio composition.
We believe that equity is a long term game. We never get perturbed by short term market volatility as we have conviction in our investment & risk management process. Our portfolio is designed with owners’ mentality i.e. being partners in the business. This protects us from short term volatility of the market and we can make more rational decisions towards our portfolio management.