Investment Risk Management

Risk is inherent to all investing, and as such, is something that no one can entirely avoid while attempting to grow their portfolio and meet their long-term goals. This doesn’t mean you should avoid investing when risk is involved, rather that you should make the most informed decisions possible to increase your opportunity and reduce risk. How do you do this?

You identify, assess, and mitigate the risks associated with each asset, the market, and your current portfolio, among other things. There are many types of risk in risk management, and accurately assessing the many threats that these risks pose to your portfolio can be a full-time job for serious investors.

That’s where Avidian Wealth Solutions comes in. Avidian brings deep experience in managing risk and the ability to holistically analyze your finances. We offer an optimized wealth management experience to high-net-worth investors, families, and business owners looking to simplify their wealth management experience, mitigate their risk, and focus on enjoying their lives.

What is investment risk management?

Investment risk management is a vital piece of any worthwhile investment management strategy. In order to properly mitigate risk, you must first properly identify and manage the many different types of risk. What is risk in investment? Investment risk can come from many places. A few significant ones include:

• Market risks are the risks inherent to investing in a market that you cannot control. Market risks generally manifest in investment values declining due to unstable market conditions, and are often caused by inflation, interest rates, and significant economic events.
• Liquidity risk is the risk that an investor with low liquidity may not be able to sell an asset when they need cash. Liquidity risk not being managed can result in an investor’s hands being tied even when they know what decisions they need to make.
• Operational risks often manifest in human error, bad information or processes, or system complications. Operational risks can cause you to miss opportunities, and cause other types of risk to be less manageable due to lack of information or action.

The job of an advisor who provides investment risk strategies is not done when the risk has been assessed, however. It is important to continuously monitor risk in order to keep up with market conditions and maintain operational excellence.

The investment risk management framework at Avidian

What makes risk management at Avidian different? Avidian uses a customized and conservative approach to all types of risk management, prioritizing your goals and the health of your portfolio over trying to outperform.

At Avidian, we get to know your finances on a deeper level this is why we offer you access to a multidisciplinary team of fiduciary financial professionals. We believe that by working in collaboration, united under common goals, we can help you make informed decisions focused on reducing your investment risk and optimizing your financial life.

After our team develops your investment risk management plan, because proper risk management is always an ongoing effort, Avidian will continue to monitor several types of investment risk, including:

• Principal risk involves your principal investment losing all of its value.
• Volatility includes the need to correct in turbulent markets, necessitating the sale of specific investments at inopportune times.
• Purchasing power is heavily correlated with inflation and interest rates reducing the value of your investments.
• Longevity includes adjusting your risk tolerance and management plan to ensure that your investments are lined up with the timelines of your goals.