In trading, who would typically handle risk management processes?

In a trading environment, risk management processes are primarily handled by the Middle Office. This part of the organization serves as a bridge between the Front Office, which is responsible for trading and client interactions, and the Back Office, which focuses on administrative tasks such as settlement and record-keeping.

The Middle Office plays a crucial role in identifying, analyzing, and mitigating financial risks that arise from trading activities. Analysts and risk management professionals in the Middle Office monitor positions, assess market volatility, and ensure that risk limits are adhered to. They utilize various risk management tools and techniques to quantify risks, and they work closely with both the Front and Back Offices to align trading strategies and operational processes with the organization’s overall risk tolerance.

By effectively managing these risks, the Middle Office helps maintain the financial health of the organization and protects against potential losses stemming from trading operations.