Risk Assessment in High-Growth Equity Portfolio Management

As a senior portfolio manager in an investment firm, you are responsible for quantifying the risk associated with a new portfolio that targets high-growth equity investments. Given the volatile nature of these assets, your objective is to develop a comprehensive risk assessment framework that incorporates both historical data analysis and forward-looking measures. Recently, the management raised concerns regarding the portfolio's potential exposure to tail risk, particularly during market downturns. Describe the methodologies you would employ to measure and manage the risk related to this new portfolio, focusing on both traditional risk metrics and alternative methods that account for non-normal return distributions.

In your response, discuss the applicability and limitations of tools such as Value at Risk (VaR), Conditional Value at Risk (CVaR), and stress testing scenarios. Additionally, consider how you would incorporate qualitative factors and macroeconomic indicators into your risk assessment process, providing a holistic view of the portfolio's risk profile.