Introduction

Why Risk Management?

Every trading strategy, portfolio, and financial institution faces risk — the possibility of loss. Risk management is the discipline of measuring, monitoring, and controlling that risk. This course implements the quantitative tools of professional risk management from scratch in pure Python.

You will implement:

  • Market Risk — Historical VaR, parametric VaR, Monte Carlo VaR, and conditional VaR (expected shortfall)
  • Statistical Risk — Marginal VaR, component VaR, stress testing, and scenario P&L
  • Tail Risk — Drawdown analysis, recovery time, Kelly criterion, and fixed fractional sizing
  • Position Management — Volatility targeting, delta hedging, and risk-adjusted performance metrics
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