What does risk management division really do?

Currently interning at a Asset Management group. Initially I thought they are in charge of managing portfolio and controlling the risk (either systematic or idiosyncratic risk) by adjusting the portfolio. Then I realized that they are basically a research division. Am I wrong about the duties of risk management division or is it just this firm that separates the duties (coz they also have bond/stock investment division).

 
Best Response

At my firm, we split into a credit research team and a portfolio team, at least when it comes to counterparty research (for credit risk). So, I'll essentially set an internal credit rating (think like S&P, but just for our eyes only), and then portfolio team takes that rating and uses it to set an exposure limit. The portfolio team does the talking with S&T and helps with the onboarding of clients etc.

We also have a products team, who oversee how much exposure we want to various types of securities etc. Plus an array of folks who work in analytics and regulatory analysis.

This doesn't even get into market risk, liquidity risk, model risk, etc. We've got teams in all of those areas.

 

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