Ellen Says:---risk budgeting is a dynamic portfolio management process whereby scarce resources are put to work to achieve the optimal result. As such, risk budgeting enables an investor to evaluate the portfolio contribution to various exposures to risk. It begins with the determination of current risk exposures to the managers and strategies. Then, it uses the risk measure as the denominator of the risk-adjusted return equation. It ends with
risk being used as the basis of "strategic risk management."
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