This course considers two highly linked issues in the investment world: performance evaluation and risk management. Risk management is first reviewed to examine investment, operational, and compliance risks and the strategies used to respond and mitigate such risks. Risk management functions are then defined, and multi-layer lines of defense are studied – including the costs and benefits of various risk mitigating strategies. Historical examples of risk failures are studied to illustrate potential risks and to identify potential solutions. Performance evaluation is then analyzed. Students are given actual fund performance data to evaluate and compare across various passive and active management strategies.
Prerequisites