WHITEPAPER

Market risk monitor

31 ene 2017
por BlackRock

Current market risk environment

 


At the start of 2017, we see continuation of a reasonably benign market risk environment, as captured by our risk metrics. Conditions appear to have become more supportive, as outlined in the BlackRock Investment Institute’s 2017 Outlook, with growing signs of reflation taking hold. However, event risk remains an area of concern: most notably, we observe political risk associated with the implementation of the policies of the new U.S. administration, the conditions of the British EU exit and key elections in several European countries. Furthermore, the potential regime change that may occur in 2017, could well have structural implications, the impact of which is hard to model at present.

Market risk monitor

Ed Fishwick and Tara Sharma from the Risk & Quantitative Analysis Team discuss the current risk conditions and the implications for investors.

Consequently, renewed episodes of sudden risk aversion cannot be excluded and the timing and extent of these may well catch investors by surprise. The recent instability in the equity-bond correlation also warrants close monitoring as it is a key risk in the context of multi-asset portfolios.

What are the implications?

Given the potential for sharp reversals in the risk environment, the importance of risk monitoring and pro-active risk management is likely to remain a crucial component of successful portfolio management in 2017. In our view, dynamic decision-making and swift implementation of changes in risk positioning may be of particular relevance for short-to-medium-term orientated portfolios.

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