What Is Risk Classification and Is It an Effective Tool

question 83

Essay

What is risk classification and is it an effective tool in the fight against repeat offending

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Definitions:

Data Mining

The process of using statistical techniques to extract and identify patterns, relationships, or information from large datasets.

Active Portfolio Management

The strategy of making buy and sell decisions of investment portfolio holdings, aiming to outperform certain benchmarks.

Modern Portfolio Theory

An investment theory that proposes optimizing the expected return for a given amount of portfolio risk, or alternatively minimizing risk for a given level of expected return, through diversification.

Markowitz

Harry Markowitz, an economist who developed Modern Portfolio Theory, emphasizing the benefits of diversification.