Blindness to risk: why institutional investors ignore the risk of stranded assets
| Autor: | Nicholas Silver |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Finance
010504 meteorology & atmospheric sciences business.industry 020209 energy Economics Econometrics and Finance (miscellaneous) Institutional investor Diversification (finance) Financial risk management 02 engineering and technology 01 natural sciences Investment management Incentive Investment decisions 0202 electrical engineering electronic engineering information engineering Economics Mainstream Business and International Management business Complex adaptive system 0105 earth and related environmental sciences |
| Zdroj: | Journal of Sustainable Finance & Investment. 7:99-113 |
| ISSN: | 2043-0809 2043-0795 |
| Popis: | There has been an apparent resistance amongst mainstream investors to integrate the risk of stranded assets into investment decisions. This paper considers if the structure of the investment chain causes investors to be blind to risks such as stranded assets. This paper considers how the interaction between financial economic theory, regulation and the practices of the fund management industry gives rise to the way the industry analyses and manages risk. The paper draws on a mixture of academic literature and the author’s own experience of industry practice. The paper finds that institutional investors are constrained to measure risk in relation to a benchmark; risk becomes a function of volatility and divergence from peers. The risk of stranded assets is invisible in the decision-making chain. The industry is further constrained by its culture, regulation and inappropriate incentives. The paper concludes that integrating stranded asset risk requires a drastic overhaul of the regulation of, and th... |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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