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Strategic Risk Management summary

Campbell R. Harvey, Sandy Rattray & Otto van Hemert

Designing Portfolios and Managing Risk

3.6 (114 ratings)
15 mins

Brief summary

Strategic Risk Management by Campbell R. Harvey, Sandy Rattray & Otto van Hemert explores the importance of effectively managing risk in today's dynamic business environment. Offering practical strategies and insights, the book provides a comprehensive framework to navigate and mitigate strategic risks.

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    Strategic Risk Management
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    Crisis alpha

    Let’s talk about crisis alpha

    This strategy is all about generating extra returns when the market hits a rough patch. Trend-following strategies come into play here, dynamically adjusting risk to keep those returns safe. These strategies involve selling when the market drops and buying when it rises – all to catch momentum across different types of assets, from stocks to bonds and commodities. 

    But there’s a question lurking: Can they still work if government bond yields start to climb?

    Research suggests that trend-following in bond futures has a solid track record of protecting against tail risks. This happens because bonds often move in a different direction than stocks. If you were to remove the exposure to trends in the bond market, you might lose some of that downside protection.

    The thing to remember is that trend-following isn’t limited to just stocks; it can work wonders for government bonds too. Its power comes from the diversification across different types of assets – sticking to non-equity markets only might not give you the best drawdown protection.

    Some folks might still be skeptical about whether momentum strategies can stay profitable. But it’s a proven fact that diversified trend-following has been delivering crisis alpha for over half a century. 

    So, for portfolios looking to weather crises, adaptive systems designed to reduce risk and keep those returns coming are a promising path forward.

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    What is Strategic Risk Management about?

    Strategic Risk Management (2021) reimagines risk management in the wake of the COVID-19 pandemic. This new framework emphasizes a unified approach that aligns investment and risk processes – featuring defensive strategies, drawdown risk controls, volatility targeting, and rebalancing. 

    Strategic Risk Management Review

    Strategic Risk Management (2014) is an essential read for anyone looking to navigate the complexities of managing risks in today's fast-paced world. Here's why this book stands out:

    • Packed with practical strategies and insightful case studies, it equips readers with the tools needed to effectively assess and mitigate risks.
    • By combining expert knowledge from multiple disciplines, the book offers a comprehensive and holistic approach to risk management, setting it apart from others in the field.
    • With its clear and concise explanations, the book manages to make the intricate subject of risk management engaging and applicable in real-world scenarios.

    Who should read Strategic Risk Management?

    • Savvy investors
    • Financial professionals
    • Finance students and enthusiasts

    About the Author

    Sandy Rattray is CIO of Man, a London-based investment group. He was previously a managing director at Goldman Sachs.

    Otto van Hemert is a former finance faculty member of NYU Stern and the current Director of Core Strategies at Man AHL. 

    Campbell R. Harvey is a professor of finance at Duke University, a research associate at the National Bureau of Economic Research, and an investment strategy advisor at Man.

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    Strategic Risk Management FAQs 

    What is the main message of Strategic Risk Management?

    The main message of Strategic Risk Management is the importance of effectively managing risk to achieve strategic objectives.

    How long does it take to read Strategic Risk Management?

    The reading time for Strategic Risk Management varies depending on the reader's speed. However, the Blinkist summary can be read in just 15 minutes.

    Is Strategic Risk Management a good book? Is it worth reading?

    Strategic Risk Management is worth reading as it provides valuable insights on risk management and its impact on strategic decision-making.

    Who is the author of Strategic Risk Management?

    The authors of Strategic Risk Management are Campbell R. Harvey, Sandy Rattray, and Otto van Hemert.

    What to read after Strategic Risk Management?

    If you're wondering what to read next after Strategic Risk Management, here are some recommendations we suggest:
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    • Show the Value of What You Do by Patricia Pulliam Phillips & Jack J. Phillips
    • The Man Who Solved the Market by Gregory Zuckerman
    • Your First Million by Arlan Hamilton
    • The Six Disciplines of Strategic Thinking by Michael D. Watkins
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    • AI for Business Leaders by Michael Ramsay