According to Forbes, there are three underlying areas within risk management that portfolio managers fail to take into consideration. Forbes argues that various aspects of risk are often analyzed separately, and the analysis may lack a comprehensive picture. Additionally, after the 2008 mortgage crisis, regulators have been on the defensive when it comes to managing existing problems, rather than proactively mitigating problems that have yet to surface. Finally, most investors are aware of basic principles like diversification, but often fail to take into account operational risks– insider trading, or even hurricanes. With more investor due diligence and the selection of asset managers committed to surveying operational risks, you can avoid some of these blind spots.
For more detail and the full article, check out Forbes.