Hedge Fund Risk Managers

Risk management developed into a specialized field in the mid-1950s as a result of the growing complexity of the corporate world and emerging risk areas such as the introduction of technology into business and manufacturing operations. Alfred Winslow Jones, a journalist and sociologist, launched the first hedge fund (HF) in 1949. Hedge funds generated significant profits during the 1950s and 1960s, and a need emerged for risk managers to evaluate hedge fund operations for liquidity, market, operational risk, legal and compliance, and other types of risk. The financial crisis of the late 2000s, growing demand by institutional investors for transparency regarding risk factors, and increasing government regulation of the hedge fund industry have prompted HF firms to expand their risk management (RM) departments or even create separate RM departments for the first time. (Before the financial crisis, the firm’s investment manager or managing partner handled RM duties.) Today, more than 30,000 hedge funds operate worldwide with roughly $5.13 trillion in combined assets under management (AUM) as of Q2 2024, according to BarclayHedge, and risk managers play an important role in their operation.