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Portfolio Risk Assessment & Risk Management - Why Is It Important?

Imagine you are traveling somewhere with a bag. You are at an airport, typing something on your phone, or reading a book. Your bag is lying beside your sofa. Your complete attention might not be on your bag, but you know it is lying there. Nobody can just come, pick it up, and run away. Right? 

Now that bag is your investment portfolio. Your attention right now might be on your work or pleasure. But somewhere beside you, your portfolio is lying. It needs your attention every now & then. Sometimes it might rain, so you keep your bag elsewhere safely. How unforeseen circumstances arise in the markets, and you respond with your stocks accordingly. You have to manage how you will carry the bag to your hotel. You are in charge of what asset classes and what degree of risk to take. Sometimes you hand it over to the hotel staff because you trust them to keep it safe. 

Similarly, you hand over your portfolio to your fund manager or portfolio managers because you trust them. But you protect your ‘bag’ at all costs, ‘portfolio’ from all risks. Today, we will be talking about analyzing & managing the risks associated with your investments & portfolio. Let us start with the analysis aspect of it. 

Portfolio Risk Assessment

Risk Assessment –

As the name suggests, analyzing, assessing, and calculating the risks associated with your investments & portfolio is Risk Analysis. We need to analyze the risks around our investments to optimize the value of our investment portfolio. To make maximum profits, we must assess all sides of the coin. These sides include assets, classification, allocation, risk, premium, returns, prospects, etc. For risk assessment, we have mentioned a few points below: 

      1. Allocate your assets properly – The first step in analyzing a particular side of your portfolio would be to have the assets placed at a location. For example, you have to find the mean weight of ten adult men. Now, what is your first requirement here? Ten adult men & a weighing scale! Similarly, to analyze the risks associated with your assets, you first allocate them to their place. Once we classify the asset classes, we move to our next step. 

        1. Assess the market risks – Once you allocate the assets to their respective classes, you should look at the general risk running in the market. Some factors are common to all businesses. Some factors affect all businesses. Take, for example, the rate of inflation. No enterprise or no individual remains unaffected by it. And these have a lasting impact on your portfolio overall. Thus, it is crucial to analyze the market risk & market standing of our portfolio well. 

          1. Calculate the risks associated with each asset classification – Once you have assessed the market risks thoroughly, the next step would be to calculate the divided risks. Market one was generic; these are more specific. Overall performance gets affected by the degree of risk exclusive to the asset classes. Each asset classification comes with its own rules, risks, and returns. And for thorough risk analysis, we must understand each asset to its core. It takes time & practice, but as you get better at it, you analyze the risks better, and overall returns on your portfolio get optimized. 

        Now that you know the risk analysis‘ steps, you can get a detailed portfolio analysis with Secvolt’s Premium Risk Assessment Tool. ( https://calculator.secvolt.com/ ) helps you get an intensive assessment of your portfolio and the prospects it holds. 

        If you need some ideas about what to read next, here they are:

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          Portfolio Risk Management

          Risk Management –

          Take the same example as earlier, where you were to find the average weight of ten adult men. You have used the weighing scale and noted their respective units. Now, you have to take out the average. Similarly, now you know the steps for analyzing the risk, you also have a premium tool to do the same. Our next step should be managing those risks. Following are some points that can help: 

              1. Invest as per your risk tolerance –

            Know where you stand. Taking risk tolerance as a base, you classify as one of the following:  

                1. You are an aggressive investor if you are ready to risk money for better profits. 
                2. A moderate investor balances the capital invested and the risk involved in it. 
                3. And you are a conservative investor if your risk tolerance is lower. You don’t want to risk your money if that comes with a higher degree of uncertainty. 

              Thus, based on your risk tolerance, you should choose your investments. For example, if you are an aggressive investor, you should go with stocks, but if conservative, you should take up a safer option like fixed deposits. 

              2.  Hone your skills & be patient –

              Remember the saying: Knowledge is power. Similarly, in the financial field, a combination of your skill, knowledge, expertise, and experience is what makes you a winner! Thus, never underestimate the power of upskilling and investing in yourself. This way, you wouldn’t just become wiser, you will also manage your risks better, and your portfolio will perform better. Patience is another factor that is a must-have for you to manage the risks better. Remember, time is the best teacher!

              We all wish there were a tool that could help us assess and manage our risks better. Well, (https://calculator.secvolt.com/) is the answer to our wishes. A premium portfolio risk assessment tool that gives you detailed insight regarding your investment portfolio. It not only puts a transparent picture of your risks but also puts forward a solution. It helps you assess and manage your risks better, so you can get the best!

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              Ashish Verma

              Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

              In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

              Early Years

              Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

              He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

              He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

              He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

              He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

              Hanif Shaikh

              Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

              Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

              Early Years

              Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

              He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

              He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

              He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

              He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

              Divakar Choudhary

              Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

              Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

              Early Years

              He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

              Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

              With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

              In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

              In his words-

              “What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

              He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!