Case Analysis Study Example | Topics and Well Written Essays - 500 words - 2

Analysis - Case Study Example Notably, all investments are marveled with investment risks that must be handled in a given way; otherwise, the affected business is headed to collapse. Risk management skills are learned. Therefore, such skills follow a given professional way since they often apply varied different models of problem solving skills. For instance, the discretionary wealth hypothesis is a perfect model of comprehensive risk management comprising of both interim shortfall constrains and downside risks that are based on ln(w-c) utility. Therefore, every business risk scenario follows a different and distinct way of management or handling. The Jarrod Wilcox’s article, Risk management: Survival of the fittest has represented different scenarios that require different and distinct risk management skills to handle. The first case scenario, Option income funds, is where brokers owned and distrusted stocks or bonds. Moreover, they distributed premiums in forms of income (Wilcox, 2004). These activities led to an intense disappointment and withdrawal of investors following gradual decline of opportunity and reduction of money flow. To build the investor confidence is this case; the risk manager should apply the Kelly’s rule of the stock portfolios. In this case, the investor should confront single period return distributions. By calculating statistical parameters such mean and variance thereafter looking into kurtosis and skewness of the date in distribution data, it is possible to predict the data distribution. This process will enable mangers to restrict or regulate rockers’ distribution habit thereby building the investor confidence (Wilcox, 2004). The Extreme CPPI case desires to protect the investor from the downside risk in order to reduce portfolio insurance. In other words, the case reflects a scenario where investors are only interested in business when profits are high. Despite timings, the investor may sometime