What are some good rules of thumb regarding risk analysis?

Risk analysis should be done after ascertainment of these rules-

A. Risk analysis is done proactively in order to minimise the risk associated with the investment and it will be helpful in eliminating the risk associated with futuristic cash flows.

B. RISK analysis should be done after the risk tolerance level should be decided proactively.

C. There should be matching of the risk with the expected rate of return and there should be a proper risk adjusted rate of return which should be analysed by the investors.

D. Risk analysis should be also eliminating the fluctuation and sensitivity to the external environment.

E. The diversification should be properly done in order to eliminate the risk associated with the unique characteristic of a particular asset.

F. Risk should be proper following up with the correlation coefficient with various assets and there should be a proper management of risk in advance.

G. Risk should also be properly matched with the investors expectation of the tolerance level and the aversion of the investor should be analysed in advance.