Comprehensive Risk Management Practices

Hard Asset Manager Code Risk Management

Aubrey is the Chief Risk Officer of a large asset management firm that adheres to the CFA Institute Asset Manager Code. In a recent internal audit, the firm discovered discrepancies between its risk management procedures and the guidelines established by the Code.

As part of the firm’s commitment to improving its practices, Aubrey is tasked with identifying the key principles of risk management that must be emphasized in the firm’s policies. Specifically, she needs to ensure that they uphold the standard for a comprehensive risk assessment process that aligns with the tenets of the Code while also enhancing their clients’ trust and engagement.

Which of the following principles should Aubrey prioritize to ensure the firm remains in compliance with the Asset Manager Code regarding risk management?

Establish a policy of risk management that solely focuses on quantitative analysis without considering qualitative factors.

Incorporate a thorough due diligence process that includes both quantitative and qualitative assessments of risks.

Limit risk management practices to only high-risk scenarios and not apply them across all investments.

Hint

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