LO 68.1: Define risk budgeting.

LO 68.1: Define risk budgeting.
Risk budgeting is a top-down process that involves choosing and managing exposures to risk. The main idea is that the risk manager establishes a risk budget for the entire portfolio and then allocates risk to individual positions based on a predetermined fund risk level. The risk budgeting process differs from market value allocation since it involves the allocation of risk.
M a n a g in g Ris k W it h Va R

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