Risk Governance Framework
Purpose
To define how risk is controlled at system level, not trade level.
This framework answers:
How do we ensure long-term survival regardless of short-term outcomes?
Core Principles
- Risk is managed before execution
- Losses are operational costs, not failures
- Capital preservation is non-negotiable
- Systems fail from poor governance, not bad trades
Risk Dimensions
Position Risk
Controls exposure at the trade level.
Session Risk
Caps damage inside a single trading session.
Daily / Weekly Risk
Prevents compounding losses across time windows.
Drawdown Limits
Defines when trading must stop and reset.
Risk-of-Ruin Awareness
Keeps probability of failure structurally low.
Governance Rules
- Fixed risk per trade
- Maximum concurrent exposure
- Loss caps per session
- Mandatory cooling-off rules
- Performance review cycles
Application
Used to:
- Prevent account blow-ups
- Enforce discipline
- Scale responsibly
- Maintain institutional mindset
The Risk Governance Framework is educational and methodological in nature. It does not constitute investment advice, trading signals, or performance guarantees.