Risk Management

One of the most challenging and exciting positions for anyone interested in developing a professional career in hedge funds is working within the risk management department of a hedge fund company.

As a risk manager you will spend your days monitoring each hedge fund under the company’s jurisdiction, identifying potential risks and evaluating the importance of each of these risks and the way in which they may affect the profitability of the investment portfolio as a whole. In order to pursue a successful career in hedge funds as a risk manager you will definitely require an analytical mind, high mathematical skills and a sharp ability to interpret and provide data in charts and graphics.

You will also need to know how to operate with specific vendor tools and methodologies and you should also be prepared to proactively suggest and implement different strategies that will help the portfolio manager increase the profitability of each hedge fund.

The role of risk management will vary from hedge fund to hedge fund, depending on the size of the fund. In smaller companies, the head of the firm usually performs this role; the presence of specific staff members trained to do these tasks is rare.

On the other hand, in larger hedge funds, there is usually a complete department devoted to analyzing the risk of each hedge fund. You can also develop a career in hedge funds as a risk associate. In this position you will support the risk manager and you are required to have at least a bachelor’s degree and some relevant experience in the field, as well as a deep understanding of different trading products.

Your main daily tasks will be maintaining value at risk, stress-testing securities that are part of an investment portfolio, and reporting on all the information gathered. In some hedge funds you may also be asked to present the results of your analysis to investors as well.