Skip to content

Risk Management

Kill switches and drawdown circuit breakers, correlation-aware exposure limits, Kupiec test VaR backtesting, tail risk hedging, escalation matrices.

Skills
39
Hand off
267
Handed off from
390

Hands off most often to

  1. Portfolio & Multi-Strategy87
  2. Regulatory Compliance47
  3. Broker Integration39
  4. Multi-Asset Derivatives39
  5. Deployment & Ops34
  6. Financial ML30

Brokers, venues and frameworks named here

Index

All 39 skills in this domain, alphabetically. Hover a row for its situation; open it for the full playbook.

B

black-swan-playbook-for-halted-marketsUse when a venue disseminates a LULD pause or market-wide circuit breaker on a symbol you hold; covers order lockdown, risk-limit expansion and notional-scaled basis-risk-aware proxy hedging, with no proxy hedge during a market-wide halt.trading-halt

C

capital-preservation-mode-for-degraded-conditionsUse when a live system needs a strategy-independent gate that blocks new orders once drawdown, order submission rate, consecutive venue errors or feed staleness breaches a limit. It blocks new orders; cancelling working ones is the kill switch.capital-preservationconcentration-risk-single-name-limitsUse when a pre-trade gate must cap single-name exposure as a share of NAV and against average daily volume, downsizing or rejecting the order and reporting portfolio Herfindahl-Hirschman concentration.single-name-limitcorrelation-aware-exposure-limitsUse when a book holds several instruments driven by the same sector or macro factor and per-symbol limits hide the real concentration; clusters instruments by pairwise correlation and caps aggregate exposure per cluster.correlation-matrixcounterparty-and-broker-concentration-riskUse when cash, collateral and positions sit at several prime brokers or exchanges and no one number says how much is at any single one; enforces NAV exposure caps and CDS spread bounds, and returns an advisory routing decision.prime-brokercounterparty-credit-risk-for-otc-derivativesUse when trading bilateral OTC derivatives outside central clearing, to compute current exposure, potential future exposure and credit valuation adjustment across ISDA netting sets with CSA collateral terms.otc-derivativescross-account-aggregate-risk-viewUse when risk is managed per sub-account and nothing measures firm-wide exposure; consolidates positions, cash and margin across accounts, enforces gross market value caps and flags internal long/short offsets.aggregate-risk

D

dynamic-position-sizing-based-on-realized-volatilityUse when a fixed percentage-of-capital rule leaves risk far higher in volatile regimes than calm ones; scales size inversely to realised volatility to hold an ex-ante risk budget constant. It cannot anticipate a gap.volatility-targeting

E

emergency-manual-override-access-controlUse when designing the break-glass path a human uses to fire a kill switch, halt a strategy or pause orders: role checks, four-eyes sign-off, verified single-use tokens and a record of who authorised what. It authorises; it does not cancel.break-glass

G

graduated-response-to-data-quality-degradationUse when market data is degraded but not obviously dead and the system must decide how much to trade; converts per-symbol quality telemetry into a bounded score and one of four mandates from full size to halt. It consumes telemetry rather than detecting it.de-riskinggreeks-based-portfolio-hedging-automationUse when an options or multi-asset book must be brought back inside delta and vega tolerances automatically, generating the hedge orders. Consumes aggregated Greeks from options-greeks-real-time-portfolio-aggregation; gamma and theta are out of scope.options-hedging

K

kill-switch-and-drawdown-circuit-breakersUse when a bot must stop trading for the day on a daily loss limit or drawdown breach: hard, strategy-independent limits that halt new orders and force-flatten. Degraded-condition triggers are capital-preservation-mode-for-degraded-conditions.kill-switch

L

leverage-limit-enforcement-across-instrumentsUse when one account holds equities, perpetuals, FX, futures and options and per-symbol size limits no longer describe how levered it is; projects post-fill gross, net-directional and per-asset-class leverage and vetoes the order.leverage-limitliquidity-adjusted-position-sizingUse when sizing across instruments of very different liquidity, capping each position by average daily volume and book depth under a days-to-liquidate limit, so a position cannot be entered that cannot be exited.position-sizing

M

margin-utilization-circuit-breakerUse when a bot trades on margin and needs a latching halt on margin utilisation at a house budget well below the broker's liquidation point, because utilisation can spike on winning positions when requirements move.marginmulti-currency-var-aggregationUse when a book holds positions in several currencies and risk must not drop FX volatility or asset-FX correlation; aggregates VaR and expected shortfall across both risk factors. Linear payoffs only.multi-currencymulti-strategy-capital-allocation-limitsUse when several strategies share one brokerage account and any of them could consume all available margin; enforces per-strategy capital caps whose total cannot exceed the account.capital-allocation

P

position-limit-breach-simulation-fire-drillsUse when scheduling fire drills that inject a synthetic over-limit position into a non-production risk stack and grade whether the pre-trade gate, post-trade control, kill switch and alerting all behaved. A grader, not a control.position-limitspost-breach-root-cause-analysis-templateUse after a risk-limit breach, runaway algorithm or severe drawdown, to build the post-mortem record: a UTC-normalised chronology, contributing factors and corrective actions, checked for completeness rather than authored for you.root-cause-analysis

R

real-time-greeks-recalculation-on-market-movesUse when an options book must show current Greeks on a live tape and full revaluation of every contract on every tick does not fit the CPU budget; decides per position between a delta-gamma step and a full reprice.options-greeksreal-time-liquidity-risk-monitoringUse when a risk report computed at mid-price says nothing about the cost of getting out; measures days to liquidate at a participation cap, spread spikes, depth collapse and a liquidity-adjusted VaR add-on. Funding liquidity is separate.liquidity-riskreal-time-var-backtesting-kupiec-testUse when you already hold a counted VaR backtest pair of observations and exceptions and need a calibration verdict; the Kupiec proportion-of-failures likelihood-ratio test for unconditional coverage. Blind to breach clustering.var-backtestingregulatory-capital-requirement-trackingUse when a trading entity must stay above a prudential capital floor such as SEC Rule 15c3-1 net capital or FCA MIFIDPRU, and you are building the daily computation that proves it did at all times.net-capital-rulerisk-adjusted-performance-attribution-per-strategyUse when several strategies share one risk budget and you need to know which earn their risk: per-strategy Sharpe, Sortino, Calmar and max drawdown, plus Euler decomposition of portfolio volatility across them.sharpe-ratiorisk-budget-allocation-across-time-horizonsUse when one account runs intraday through multi-week strategies and the portfolio volatility budget must be split across horizon sleeves, deriving each sleeve's volatility target and position-size scalar.risk-budgetingrisk-control-bypass-audit-loggingUse when a human can override a pre-trade or intra-trade risk control and the override must leave evidence: who requested, authorised and verified it, what was bypassed and until when. Parameter changes are audit-logging-for-configuration-changes.audit-loggingrisk-control-configuration-change-approval-workflowUse when implementing maker-checker change control for production risk configuration: immutable approved payloads, role separation, expiry, optimistic concurrency and idempotent application. Break-glass may only tighten limits.change-controlrisk-control-dependency-mappingUse when you need to know what can silently impair or bypass a risk control and what it takes down with it; maps dependencies on data, positions, clocks, state stores and venue sessions into a blast-radius graph.dependency-mappingrisk-control-latency-budgetUse when auditing the timing of a risk control rather than its logic, because a correct kill switch that takes seconds to get a cancel in front of the matching engine has already failed; budgets observation, decision, dispatch and acknowledgement.latency-budgetrisk-control-unit-testing-frameworkUse before promoting a change to a pre-trade risk control, to run positive, boundary, breach and malformed-input cases and check the engine still rejects exactly what it should, matching triggered rule ids.unit-test-harnessrisk-limit-breach-escalation-matrixUse when a breach needs a proportionate response rather than a binary halt; maps breach ratio and duration onto a severity ladder returning the action your enforcement layer should take.limit-breachrisk-limit-calibration-against-historical-drawdownsUse when setting a maximum-drawdown limit, daily loss limit and position-size scalar from a strategy's own realised return history rather than a round number, using observed drawdown, Ulcer index and quantiles.drawdown-calibrationrisk-metric-recalculation-frequency-tuningUse when a real-time risk engine cannot recompute every metric on every tick; assigns metrics to cadence tiers and accelerates them under stress. Never use it to defer a per-order pre-trade check.risk-frequencyrisk-model-backtesting-against-realized-outcomesUse when you hold the raw dated series of realised P&L against forecast VaR and need an auditable validation verdict: exception counting plus ordering-sensitive tests. For an already-counted pair see real-time-var-backtesting-kupiec-test.kupiec-pof-testrisk-reporting-for-external-stakeholdersUse when risk figures are about to leave the firm to an investor letter, a prime broker feed or a supervisor, and position-level detail must be aggregated away. Regulatory filings such as Form PF need the detail this withholds.lp-reporting

S

scenario-based-stress-testing-custom-shocksUse when revaluing a factor-mapped book under deterministic multi-factor shocks with betas and durations, whether a historical crisis or a hypothetical. Per-symbol replay of a past crash is stress-testing-against-historical-crash-scenarios.stress-testingstress-testing-against-historical-crash-scenariosUse when replaying the positions you hold right now against per-symbol historical crash returns such as 2008, 2020 or a flash crash, to quantify tail P&L. Factor-mapped shocks with betas are scenario-based-stress-testing-custom-shocks.stress-testing

T

tail-risk-hedging-with-optionsUse when converting a stated annual premium budget into a contract count for a rolling out-of-the-money index put overlay, with Black-Scholes Greeks and the honest annual drag across rolls.tail-risk

V

value-at-risk-var-live-monitoringUse when a live book needs a portfolio loss estimate refreshed against current weights, computing parametric, historical-simulation and conditional VaR and vetoing risk-increasing orders that breach the limit.value-at-risk
Search the whole catalog