Risk in an Age of Uncertainty:
How are Investors Understanding and Managing It?
If “cautious optimism” abounded at the beginning of 2015, many institutional investors marked the start of 2016 with sentiments of uncertainty. Along with dampened return expectations, this current environment reflects the substantial impact of policy-driven markets as well as questions surrounding risk allocation and volatility. In recent years, investors have learned that outlier events occur more frequently than models would suggest, and highlight just how deeply interconnected markets and the institutions that govern them really are. We often see seemingly isolated risk events having global ramifications. While some of these risks have been around for many years (the risk of a mismanaged landing in China and Eurozone fragility, to name two), others are relatively new and present a growing concern for investors. With additional risks on the rise, market complexity is at a zenith and fuels uncertainty – particularly systemic risks. How are investors addressing risks and uncertainties? How can investors prepare for the next ten years, i.e. identifying uncertainties that can manifest into risks? The Summer Roundtable will look at the risks facing institutional investors in this current volatile environment and strategies being utilized to curtail them.