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Learn about hedge fund risks, regulatory frameworks, and organizational structures in this 51-minute FRM Part 2 video lesson covering Book 5, Chapter 12. Explore the different types of risks faced by hedge fund investors, including liquidity risk, operational risk, and counterparty risk. Examine how hedge fund activities can contribute to systemic risk in the financial system and understand the mechanisms through which these risks propagate. Analyze various regulatory approaches implemented to mitigate hedge fund-related risks, including registration requirements, disclosure obligations, and capital adequacy standards. Study the typical organizational structure of hedge funds, including the roles of general partners, limited partners, and fund administrators, while understanding the economic and legal motivations behind these structural choices. Master key concepts such as the hedge fund fee structure, performance incentives, and governance mechanisms that influence fund operations and risk management practices.
