A successful investment process requires a risk management structure that addresses multiple aspects of risk. Here we lay out a best practices framework that rests on three pillars: Risk Measurement, Risk Monitoring, and Risk-Adjusted Investment Management. All three are critical. Risk...

The traditional asset allocation to equities and bonds is characterized by high volatility and lacks sufficient diversification, particularly during periods of distress. The meltdown of 2001-2002, in which markets around the world tumbled together, amply demonstrated this fact. As a consequence,...