Abstract

This chapter firstly establishes the concepts of portfolio risk management and portfolio risks before discussing how portfolio risks during portfolio execution are managed, and the importance of building and maintaining a risk-efficient portfolio. The chapter concludes by confirming that portfolios are risky undertakings and that successful delivery of strategic benefits through portfolios depends on effective portfolio risk management. Although there are similarities and parallels between the process for explicit management of individual portfolio risks and the well-established project risk management process, portfolio risks can arise from above and below the portfolio as well as within it, and the portfolio risk management process must tackle all these sources. Portfolio risk management must manage overall portfolio risk exposure, through application of a risk-efficient approach to the construction and ongoing execution of the portfolio.

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