Business risk assessed holistically

Author: Michael Pagliari, James Kirk (

Categories: Business risk, Business Strategy, Investment & Risk
Tags: assets, Markowitz, MPT, risk assesment
Business risk assessment can be approached in a number of different ways, and there are popular theories and methods to follow. In this TV show Michael Pagliari explains why he thinks it's better to look at risk in context.

Business risk assessment methods

I actually think that risk is something that has to be thought about carefully and over a sort of reasonable period of time. I don’t think there’s any deterministic method of establishing risk. So for example a lot of institutions use a Markowitz-type model to diversify assets and it really hangs on measurement of risk by a single defining number and I think this can be quite misleading and it’s really better to look at risk in a holistic sense and in the context of what the client’s trying to achieve. Well if for example, let’s assume that you own a business, you may well have a lot of risk as such within your own business and you put aside some cash savings for the future, well you would certainly want to take into account the risk that you own as an individual outside of the assets that you, the financial assets that you own, and that may be business risk, it might be real estate risk, and you would like to make sure that there aren’t too many overlaps or things or assets in the financial portfolio that could actually add to your overall risk. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

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