> ## Documentation Index > Fetch the complete documentation index at: https://docs.bordier.com/llms.txt > Use this file to discover all available pages before exploring further. # Risk management > How Bordier separates the risks diversification can reduce from those it cannot, and the three places risk is controlled in practice. Every decision to invest carries risk, and so does the decision not to. Cash left in a bank is likely to be eroded in real terms by inflation and tax. Bordier's framework therefore starts by separating the risks diversification can reduce from those it cannot. ## Risks diversification cannot remove | | | | - | - | | **Inflation** | Inflation exceeds the return on the investment, so a nominal gain is a loss in real terms | | **Shortfall** | The return is less than the return needed to meet the client's goals | | **Market** | Losses caused by factors affecting markets as a whole. Also called systematic risk | | **Economic and political** | Political interference such as war, nationalisation or exchange controls, or an unexpected economic event | | **Other** | Natural events, including earthquake, tsunami and pandemic | ## Risks diversification can reduce | | | | - | - | | **Country** | A domestic event, for example a change of government, moves the local market | | **Credit** | A borrower defaults | | **Currency** | A devaluation reduces the investment's value in the reported currency | | **Interest rates** | A rise causes the local bond market to fall | | **Liquidity** | An investment proves difficult to sell | | **Manager** | The manager does worse than the benchmark | Diversification reduces these. It does not remove them. ## Volatility is a gauge, not the whole of it Volatility measures how much a holding, an asset class or a portfolio fluctuates in value. It varies with the instrument, with the period observed and with the way holdings are combined. Tolerating fluctuation is not the same thing as being able to absorb a loss, particularly a loss that puts an objective out of reach or alters a client's circumstances irreversibly. ## Risk belongs to the portfolio, not to the holding No holding is judged in isolation. What matters is the overall level of risk in the portfolio. A small position in a higher-risk investment that has low or no correlation with the rest can lower risk across the whole portfolio, even where that portfolio was built for a low risk appetite. ## Where risk is controlled in practice * **At selection.** The equity screen removes business models showing signs of obsolescence, companies excessively exposed to environmental, social and governance risk factors, and companies overexposed to a single region or product. See [Private Asset Management](/solutions/private-asset-management). * **After the trade.** Structured products are monitored across their life, and forex positions carry daily risk analysis. * **At the bank.** No speculative positions on the balance sheet, and no lending other than against a client's own portfolio. ## Related * [Portfolio construction](/investment/portfolio-construction), the mechanics of diversification. * [Our investment principles](/investment/principles), the philosophy this sits inside. * [Investment solutions](/solutions/investment-solutions), the monitoring described above in full. General information only. Not investment advice, not a solicitation and not an offer. Eligibility, services and terms differ by jurisdiction and by client. Speak to your banker about your own circumstances. *Sources: the Bordier UK risk and suitability guide, 11th edition; Bordier & Cie Group presentation, English, 2026.* This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.