Buyside firms, such as hedge funds, have different risks to their sellside counterparts and therefore shouldn't adopt the same control orientated risk management policies, according to Richard Bookstaber, president of Scribe Reports.
Bookstaber noted that broker/dealers firms have more complex risk considerations, including more leveraged portfolios, and often have management without direct trading experience so need a strict control-based risk management strategy. On the other hand, hedge funds typically have more experienced staff who better understand the risks of the trade so do not need controls that are as rigid.
