tailieunhanh - Fund Board Oversight of Risk Management 2011

All companies, including registered investment companies (funds), incur risk as a part of doing business. In order to achieve investment returns, a fund must incur investment risks, and the risk of loss arising from daily operations is an unavoidable by-product of any business, including the fund business. Fund advisers have long been responsible for managing funds’ risks. An adviser seeks to optimize investment risk to produce the best risk/reward return for a fund relative to the fund's objectives and risk profile, and the adviser and other service providers manage the operational risks associated with the services they provide to the. | Fund Board Oversight of Risk Management September 2011 O INVESTMENT COMPANY INSTITUTE pcL. INDEPENDENT DIRECTORS COUNCIL Nothing contained in this report is intended to serve as legal advice. Each investment company board should seek the advice of counsel for issues relating to its individual circumstances. Copyright 2011 by the Investment Company Institute. All rights reserved. No part of this publication may be reproduced stored in a retrieval system or transmitted in any form or by any means-electronic mechanical photocopying recording or otherwise-without the prior written authorization of ICI. Fund Board Oversight of Risk Management Contents Executive Introduction and I. Overview of Risk A. Risk Concepts and B. Risk Management II. Investment Company III. Roles of the Fund Board and A. Oversight of Risk Management by Fund B. Risk Management by C. Establishing a Common Understanding Regarding IV. Risk Management Practices in the Fund A. Organizational B. Risk Management V. Board Practices in Overseeing Risk A. Board B. Board C. Educational D. Executive E. Evaluating Board Governance F. Disclosure Concerning the Board s Oversight .