Thread by @SAH16928046

What is Equity #Portfolio #Risk Management?
If I understand your question correctly, the Equity Portfolio Risk Management should be primarily be concerned with managing the market and liquidity risk of Equity or akin linked Securities.
@GARP_Risk @CQFInstitute @icmacentre @ICMA

Other Portfolio Investment Management Risks might include =>
1.Transactional Risk
2.Price and Fair Value Modelling Risk
3.Financial Reporting Risks
4.Trading Microstructure Risks
5.Legal Risk
6.Hedging Risk using Risk Financing Methods

Investments and/or trades in the Equity Securities aka company issued shares generally falls into three-segmented and specialized market categories =>

1.Traded Securities Markets or the Listed Equity Capital Market are usually issued via an #IPO (Initial Public Offering Mode) to the stock market investors!
These are always Traded and Quoted Stocks aka Common Shares on an exchange such as the Footsie 100 Index in the UK.

2.Private Equity Market - known to investors as the Non-listed Stocks neither trade nor are quoted on any listed exchange counter of a stock market.
These shares are bought and sold privately using #OTC Over-the-Counter Markets.

3.Mutual Fund issued Equity Securities packaged in the form of investment portfolios which are referred to as collective or trust investment schemes. These legally fall into Open or Closed-End Funds which are collective investment schemes.

(I would not discuss the risks and market operations of fund linked investment strategies or securities or their structures in this answer provided to the question).

Vanilla Equity Securities that are issued by Businesses usually large joint-stock companies are generally of two types =>
1.Common Stocks (No obligation to pay a fixed rate of return to the investor in the form of dividends)

2.Preferred Stocks (will pay a fixed rate of return to the investor in the form of dividends). This kind of Equity Securities is referred to as Hybrid Securities.

Equity Securities are primarily exposed to three different financial risk factors, namely, =>

1.Market (price) Risk ->
a.Market risk is higher for listed securities or public traded stocks via an exchange, as market forces tend to instigate volatility within price-value systems.

2.Liquidity (Buy and sell-side impact cost) Risk =>
a.Liquidity risk is higher for private stocks or unlisted securities.

3.Operational Risk =>
a.Fair Value Modeling and Secondary Market Valuation risk are higher for Private Equities / Unlisted stocks.

As the Price Discovery Mechanism and transparency of financial data have disclosures and other inbuilt flaws which affects pricing transactions in Non -traded and Non-Quoted Asset Class Markets, hence, the #PE is not very different.

b. So Investment Analysts in PE Markets cannot always rely on the audited or unaudited financial information which is provided to them by companies which are not listed on an exchange.
This is a BIG OPERATIONAL RISK!

4. Credit Risk =>

a. No credit or default risk theoretically exists in Common Shares

b. Credit risk does exist per se in Preferred Stocks because if the company fails to pay a #DIVIDEND, that is tantamount to an investment contract violation and will have legal consequences for the issuer.

5.I won't discuss Institutional Investment arrangements done via a certain type of private placement mechanism for a special class of shares or lots that are offered to the Large Ticket Investors before an #IPO takes place.

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