This issue is dedicated to the complex task of understanding just what risk really means in the investment context. We’ve decided to tackle the problem on multiple levels. This edition spans the topic by providing articles that range from being highly accessible to the noninvestment layman, to highly informative for those readers trying to get a more comprehensive insight into the issues, to highly technical and innovative, reflecting our promise to introduce some of the best intellects in the SA investment field. The issue starts with an excellent and highly readable article on “Risk Management: Art or Science?” by Grant Irvine-Smith of Investec.
Professor Dave Bradfield from Cadiz then provides a comprehensive overview concerning the important concepts of risk, with research that he’s conducted specifically on the SA market. Mahesh Cooper, of Allan Gray, provides an article for all readers that suggests that, for most investors, the risk of volatility of returns pales in comparison to the risk of not having enough money by the time people retire. Then we hit the articles for our serious risk techies. In rapid succession, we have three contributions that highlight the strengths and weaknesses of various measures of risk. Peter Urbani opens and closes this section with his coverage, first of Value at Risk and then with a discussion of an exciting new risk measure, the Omega Risk Measure. Sandwiched between those two is a thought-provoking article by Marius Botha and Marc van Veen that suggests that we really need to start considering the issue of liquidity when we embrace such risk measures as Value at Risk. Finally, just in case you felt we’d lost the lay reader completely, Michael Streatfield, of Investec, brings us back to earth with an article highlighting the point that perhaps the greatest risk in the investment decision-making process is actually us human beings and our aberrant behaviour regarding financial matters