Saturday, January 8, 2011

Management Risk

Management Risk is essentially the risk of poor management; i.e. management who make bad decisions, have bad processes, practice unethical behavior, have poor controls, etc. Management risk can impact on public companies, and thus hurt stock returns (e.g. Enron), but management risk can also impact on managed funds. Thus it pays to do a degree of due diligence on the management of an investment before committing funds.

Synonyms: Governance risk, Ethics, Due diligence, Manager selection

Comments?
If you have any further questions or would like to add to this fund management term, then please submit your thoughts below.

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