Effective Risk Management Framework under AMC

You are the Chief Risk Officer of a mid-sized asset management firm that has recently adopted the CFA Institute Asset Manager Code (AMC). The firm is committed to adhering to the ethical guidelines of the AMC and is particularly focused on enhancing its risk management practices.

Your firm manages a diverse range of investment products, including equities, fixed income, and alternative investments. As part of its risk management strategy, the firm aims to ensure transparency and consistency in its risk assessment procedures.

Discuss the key components of an effective risk management framework that your firm should implement to align with the AMC principles, specifically addressing how these components enhance client trust and ethical standards. Be sure to elaborate on how open communication, continuous risk monitoring, and the integration of risk management into the investment process can benefit both the clients and the firm’s compliance with the AMC.