What is a Risk Management Diversification Plan?
A Risk Management Diversification Plan is a strategic plan used by financial and investment institutions that outlines and implements a strategy to diversify risk within portfolios. This plan focuses on minimizing exposure to specific risks or sectors. By diversifying a portfolio, organizations can reduce the risk of a large financial loss in the event of a market downturn, or the failure of a single company or sector.
What's included in this Risk Management Diversification Plan template?
- 3 focus areas
- 6 objectives
- 6 projects
- 6 KPIs
Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.
Who is the Risk Management Diversification Plan template for?
This Risk Management Diversification Plan template is for financial and investment institutions. It provides a framework for creating a comprehensive strategy that outlines steps to reduce specific risks or sectors that a portfolio may be exposed to.
1. Define clear examples of your focus areas
A focus area is a broad topic in which to categorize objectives and action items. Examples of focus areas can include diversifying risk, managing liquidity, and monitoring credit risk. Each focus area should include objectives and action items that are related and directly support the overall goal of the Risk Management Diversification Plan.
2. Think about the objectives that could fall under that focus area
An objective is a specific goal that is derived from the main focus areas. Objectives should be measurable and achievable. Examples of some objectives for the focus area of Diversify Risk could be: Minimize Exposure to Specific Risks, and Minimize Exposure to Specific Sectors.
3. Set measurable targets (KPIs) to tackle the objective
KPIs (Key Performance Indicators) are measurable targets used to track progress towards an objective. Examples of KPIs include increasing portfolio diversification score, decreasing relative sector exposure, increasing cash reserves, and decreasing days before payment due.
4. Implement related projects to achieve the KPIs
A project (action) is an activity that an organization can implement in order to achieve the desired KPI. Examples of projects include creating a portfolio with diversified assets, monitoring relative sector exposure, and monitoring loan portfolios.
5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy
Cascade Strategy Execution Platform is a comprehensive strategy management solution that enables organizations to effectively manage and track progress towards their strategic plans. Cascade provides visibility into objectives, action items, and KPIs, and helps organizations achieve results faster and more efficiently.