When You’re the PM and the Risk Officer

At most independent funds, wearing multiple hats isn’t a choice, but rather the job itself. There’s no CRO sitting across the hall, no risk committee checking your stress tests, and no quant desk throwing sand in the gears. You’re the portfolio manager, CIO, sometimes COO, and yes, also the risk officer.

But when market stress hits or a trade draws down, that same structure can become a liability. The voice that should challenge your conviction is often the same one that placed the bet. It’s not ideal, but it’s reality. This piece is about how to do that well, without pretending you have a department behind you.

Starting with the obvious

Most emerging managers are risk-aware—many even came from large firms with robust infrastructure. But it’s one thing to run a risk process inside a large team, and another to do it when your day also includes portfolio construction, investor calls, data licensing, and who knows what else.

Replicating the risk processes you’re familiar with on a smaller scale is rarely feasible, especially early on. What happens instead is a slow drift: risk analysis becomes less structured, more intuitive, and less frequent. You start asking, “How bad could this really get?” instead of “What would I tell my investors if this got worse?”

Risk is the easiest thing to downgrade quietly. You stop checking certain dashboards. You “eyeball it” on exposure drift. You stress test only when markets force you to. You’re the only one looking at risk, and only when you have time.

If any of that feels familiar, you’re definitely not alone. But there are ways to structure risk management that are realistic for lean teams and don’t require a quant desk or a second headcount. Here’s a better plan: build a lightweight, repeatable process that doesn’t require a team or a full day of your time.

A practical risk loop

1. Define what risk means for you

Start here, and be specific. What are you actually paid to take risk on, and what would be considered sloppy?

Examples:

• Long/short: net/gross exposure, sector skew, single-name concentration
• Macro: FX basis, cross-asset correlation blow-ups, political event risk
• Credit: liquidity mismatches, spread beta, exposure to idiosyncratic tail

Ask yourself:

• “What would I need to explain in my next LP letter?”
• “What would keep an allocator from renewing next year?”

That’s your risk perimeter. Write it down and be precise. Vague concepts like “volatility” or “market risk” are less helpful than concrete examples like “unhedged exposure to rates” or “liquidity mismatch across books.”

2. Monitor it in plain language

You don’t need a beautiful dashboard, but you do need something that gives you a clean, consistent view into the moving parts of your portfolio. That could be a spreadsheet, or it could be a more sophisticated tool—that’s up to each manager to decide based on personal preference and business constraints. But it has to show up on a regular basis.

Build a short list of metrics you actually look at:

• P&L attribution vs. expected
• Shifts in exposure that weren’t planned
• Net and gross exposure levels
• Single-name and sector concentration
• Stress test results under 1–3 relevant scenarios
• Any measure you told investors you watch (they’ll ask again)

You’ll want to see these over time because you can’t improve what you don’t measure consistently. Visuals will be helpful. Ideally, your tool of choice should ping you if one of them starts to drift, so keep that in mind when making your pick.

3. Stress it before the market does

Stress tests don’t need to be elaborate, but they do need to be relevant. Think of them like fire drills. You’ll never be able to anticipate everything, but you’ll start building reflexes.

Run scenarios that matter for your book and stay away from generic ones from a whitepaper. Your “what breaks me?” list. It could look something like:

• “What if this position is wrong and gets worse?”
• “What if my hedges stop working?”
• “What if one crowded short doubles?”
• “What if I’m right, but mistimed?”
• “What if I’m wrong and early, and it takes three months to recover?”

Explain it—to yourself, before anyone else asks

If someone asked you today to justify your portfolio positioning, could you do it in two paragraphs? Could you articulate the risks you’re actively taking, the ones you’re watching, and the ones that would prompt a change?

Write it down, even if it’s once a quarter. When the market turns or an investor calls, this memo becomes your compass. And when you’re juggling a dozen priorities, knowing that your risk thinking is documented, repeatable, and grounded in real data is what buys you breathing room.

This kind of structure doesn’t require a large team or enterprise software. But it does benefit from having a few analytics that work the way you think, not the way a textbook does. Tools will never replace judgment, no matter how smart they get, but they can help make sure you’re applying it where it matters.

Structure and peace of mind

Borrow from the discipline of risk professionals: document your assumptions, revisit your stress tests, and write the memo before it’s needed. But above all, build a routine you can trust—because that’s the first step toward building one your investors will trust.

No framework takes uncertainty off the table—it comes with the job, after all. Markets will surprise you. Trades will go sideways. But a good, robust framework gives you a peace of mind, making sure that when risk shows up, it won’t be the first time you’ve met.

**********

Kevin Becker is a Co-Founder and CEO of Kiski. Connect with him on LinkedIn here.