Question

The focus of portfolio risk management is to address strategic issues and support the organization to achieve its strategic goals. Read the article titled as ‘Portfolio Risk Management and Its Contribution to Project Portfolio Success: An Investigation of Organization, Process, and Cultures’ by Julian Teller and discuss how portfolio risk management is done in your organization. How it helps your company to achieve its strategic goals.

Answer 1

Uncertainties could affect positively or negatively to a portfolio's objective. The impact couldn't be foreseen. Thus, it is crucial to have an effective portfolio risk management. Therefore, we could eliminate the uncertainties as much as possible. The major goal is to mitigate the activities that may impose a negative impact.
In our organization, portfolio risk management is ensured by following the margin of safety strategy. It is the difference between the price of investment and fundamental value. In a manner, we could state that it is the comparison of price and value. As larger the margin of safety becomes, the lesser would be its risk level. The investment made by the company wouldn't be based on intuitions. They would look whether the entity has a strong balance sheet and quality management. This would help the company to focus on all other core activities. Also, as there would be less risk, the entity could satisfy all the stakeholders.