Make an effective budget for risk
Jason Clout
The concept of a 'risk budget' comes from the investment world, where risk is clearly understood to be the other side of return – and is hence desirable, up to a certain point.
Ideally, successful investors understand the risks they are taking; are prepared to take risk only when it is economically justifiable – in other words, where they get paid (in returns) to take it; and maximise the expected reward for every unit of risk they choose to take.
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