Diversification and Diversity: Difference between pages

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(Reference hedging.)
 
imported>Doug Williamson
(Expand for affinity bias.)
 
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''Risk management.''
1. ''Corporate governance''.


Diversification is the process of spreading risk, to limit the possibility that an adverse event affecting a small number of investments could have an unacceptably detrimental effect on the overall portfolio.
In the corporate governance context, diversity refers to the range of people employed by an organisation, especially in the most senior positions, including the board of directors.


Often summarised as 'Don't put all your eggs in the same basket'.
Diversity normally includes gender, race, sexual orientation, religion, nationality, disability, age and educational background, but it may include other additional factors.


In corporate finance, the term is often used to mean the process of ensuring that an investment portfolio is constructed such that all possible specific risk (diversifiable risk) is eliminated.
Lack of diversity may be result of unconscious biases, including affinity bias.




Diversification is a form of risk reduction and hedging.
2. ''Investment''.


However, some residual risks cannot be eliminated by diversification.  
In the investment context, diversity is the beneficial result of the appropriate diversification of investments.




== See also ==
== See also ==
* [[Asset allocation]]
* [[30% Club]]
* [[Cash in the new post-crisis world]]
* [[Affinity bias]]
* [[Correlation]]
* [[BAME]]
* [[Credit risk diversification]]
* [[Board of directors]]
* [[Diversifiable risk]]
* [[Corporate governance]]
* [[Diversity]]
* [[Corporate social responsibility ]]
* [[Hedging]]
* [[D&I]]
* [[Market risk]]
* [[Developments in corporate and market regulation: implications for the treasurer]]
* [[Matching]]
* [[Diversification]]
* [[Non-diversifiable risk]]
* [[ESG investment]]
* [[Portfolio]]
* [[Ethics]]
* [[Specific risk]]
* [[Governance]]
* [[Kay Review]]
* [[Institute of Business Ethics]]
* [[Shareholder value]]
* [[Stem]]
* [[UK Corporate Governance Code]]


[[Category:Risk_frameworks]]
 
===Other links===
[http://www.treasurers.org/node/10141 Doing the right thing, ''Sarah Boyce'', The Treasurer]
 
[[Category:Working_effectively_with_others]]
[[Category:Investment]]
[[Category:Ethics_and_corporate_governance]]

Revision as of 10:55, 7 December 2018

1. Corporate governance.

In the corporate governance context, diversity refers to the range of people employed by an organisation, especially in the most senior positions, including the board of directors.

Diversity normally includes gender, race, sexual orientation, religion, nationality, disability, age and educational background, but it may include other additional factors.

Lack of diversity may be result of unconscious biases, including affinity bias.


2. Investment.

In the investment context, diversity is the beneficial result of the appropriate diversification of investments.


See also


Other links

Doing the right thing, Sarah Boyce, The Treasurer

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