[Verse 1]
Every portfolio needs a plan to stay secure
Risk governance sets the framework that's for sure
Budget your risks like money in the bank
Monitor closely so your ship won't ever sink
Framework first, then budget what you can
Keep watching close with your risk management plan
[Chorus]
VaR and CVaR, measure what you might lose
Historical, parametric, Monte Carlo you can choose
Stress test scenarios when the market turns rough
Expected shortfall shows when VaR's not enough
Risk management, risk management
Protect what you've built with careful intent
[Verse 2]
Market risk comes when prices move around
Credit risk hits when borrowers can't be found
Liquidity's tricky, got two types to know
Asset liquidity and funding's cash flow
Operational risk from people and systems too
Internal failures that could hurt what you do
[Chorus]
VaR and CVaR, measure what you might lose
Historical, parametric, Monte Carlo you can choose
Stress test scenarios when the market turns rough
Expected shortfall shows when VaR's not enough
Risk management, risk management
Protect what you've built with careful intent
[Bridge]
Fat tails and tail risk, extreme events appear
Systematic versus idiosyncratic, make it clear
Factor-based analysis breaks it down
Derivative overlays help manage what's around
[Verse 3]
Portfolio credit risk spreads through the whole
Correlations matter, they play a big role
Decompose the risks to see what's inside
Systematic factors you cannot hide
Idiosyncratic risks are company-specific
Use this knowledge to be more prolific
[Chorus]
VaR and CVaR, measure what you might lose
Historical, parametric, Monte Carlo you can choose
Stress test scenarios when the market turns rough
Expected shortfall shows when VaR's not enough
Risk management, risk management
Protect what you've built with careful intent
[Outro]
From governance down to the tail risk extreme
Risk management builds your financial dream
Monitor, measure, and mitigate well
Success in finance has stories to tell