Volatility Risk Management

Volatility risk management involves strategies to handle the uncertainties in financial markets that can cause sudden price swings in assets like stocks or bonds. These fluctuations can impact investments, leading to potential losses. By assessing and mitigating potential risks—through techniques like diversification, options trading, or setting stop-loss orders—investors aim to protect their portfolios from extreme movements. Effective volatility risk management helps ensure that an investment portfolio remains stable and meets financial goals, even during turbulent market conditions.