This is a fundamental rule of investment: returns can only be achieved by taking some risk; the higher the desired return, the higher are the risks that must be taken.
Everything that we do is designed to reduce the frequency and severity of capital losses by actively managing the risk that is being taken. Our Investment Committee have designed and built a proprietary risk model which allows us to closely monitor risk.
We frequently try to find new ways of mitigating risk. For example, in 2010 we undertook a project with the Oxford University’s Saïd Business School to develop a model to help us predict extreme negative events (fat tail events).