Concentration Risk

From Open Risk Manual

Definition

Concentration Risk is a general term applicable across various risk types and denoting excessive dependence and/or sensitivity of the measured risk on specific risk factors. Managing concentration risk is typically one of the key objectives of Risk Management or Portfolio Management.

Examples

  • Credit Risk Concentration, with various subtypes:
    • Name Concentration
    • Industry Concentration
    • Geographical Concentration
  • Market Risk Concentration

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