In the arena of finance, risk management
refers to the practice of identifying potential risks in advance, analyzing them and taking precautionary steps to reduce/diminish the risk. When an entity makes an funding decision, it exposes itself to a number of financial risks. The quantum of such risks depends on the kind of monetary instrument. These economic dangers is probably in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. So, to be able to reduce and manipulate the publicity of investment to such risks, fund managers and buyers practice chance control. Not giving due importance to danger
control at the same time as making investment selections would possibly wreak havoc on investment in instances of financial turmoil in an economy. Different levels of risk come attached with one-of-a-kind classes of asset classes. For example, a fixed deposit is considered a much less volatile investment. On the opposite hand, funding in equity is considered a risky venture. While practicing danger
management, equity buyers and fund managers generally tend to diversify their portfolio so as to decrease the exposure to chance.
Relevant Topics in General Science