Managing Risk

Managing Risks in All Environments 

PGIM’s risk management approach, across asset classes and investment styles, grounded on Prudential Financial Inc.’s history of managing risk for over 150 years, enables our affiliate managers to apply deep expertise, identify emerging risks, and deploy investment strategies for the benefit of our clients. This approach reflects our belief and experience that as the investing backdrop changes, the drivers of risk will likely evolve as well.

Balancing Risk and Reward

Across market cycles, PGIM seeks to appropriately balance risk and reward through a combination of systematic top-down and bottom-up monitoring and assessment of market, credit, liquidity and operational risks. Through our multi-manager model and global footprint, PGIM provides institutions access to a range of investment strategies that are designed to mitigate fallout in times of market stress, generate returns during periods of volatility, and provide diversification through public and private alternatives and dynamic multi-asset solutions. 

At PGIM, risk management is at the center of our corporate governance, investment process, and organizational culture.

2024 Global Risk Report: Resilient Investing Amid Geopolitical Uncertainty

Part 1: PGIM’s survey found that geopolitical risk and elections are top of mind for investors. Explore strategies to mitigate risk and capture opportunities. Explore Global Risks >

Part 2: Explore how geopolitical risks are changing the way investors are constructing their portfolios in the US, Europe, Asia-Pacific and Middle East. Explore Regional Risks >

A COMMITMENT TO RISK MANAGEMENT

With more than 1,400 investment professionals located on the ground across 42 offices, PGIM is focused on managing risk, harvesting its opportunities, and mitigating its potential adverse effects wherever these may arise. 

Risk Processes

Implement governance and investment processes that seek to identify risks that may potentially impact investment performance of public and private assets

Managing Risk

Aim to manage risks with custom stress testing, disciplined due diligence, and asset-class diversification 

Regular Monitoring

Update and monitor qualitative and quantitative rankings, and proprietary risk attribution models

Risk Reviews

Conduct periodic and ad-hoc in-depth risk reviews with investment committees

RISK MANAGEMENT FRAMEWORKS ACROSS ASSET CLASSES

PGIM Fixed Income is an active, global fixed income manager that builds market-leading risk management tools and provides novel and insightful advice to our portfolio management team. Our risk managers collaborate with portfolio managers and client advisors to promote portfolio construction that aligns with our clients' return expectations and risk preferences. The team also educates our investment professionals, clients, and prospects on our proprietary risk management framework.

 

Our risk management framework is grounded by several distinctive features, including:

Substantial Resource Commitment
  • Up to 20% of PGIM Fixed Income’s investment professionals are fully dedicated to risk management and quantitative analysis functions
Dynamic, Daily Interaction with all Trading Desks
  • Risk management, quantitative modeling and strategies teams sit on the trading floor
  • Portfolio Analysis Group (PAG) employees sit directly on trading desks
Proprietary Risk and Attribution Models
  • We believe risk management is a core investment management function and should not be outsourced
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PGIM Real Estate offers a range of real estate equity, real estate debt, agriculture and sustainable investment strategies across the risk-return spectrum.  

We put our fiduciary responsibilities first and are committed to transparency and maintaining a robust risk management environment. PGIM Real Estate takes a consistent approach to risk management that is applied globally to assess multiple levels of risk management at the enterprise, operational and investment levels.

Our robust risk management practices are coordinated through our well-staffed Legal, Investment Risk, Operational Risk, Internal Audit, and Compliance teams to provide governance, organizational infrastructure and processes to:

  • Address major layers of risk on  macro, portfolio and investment levels 
  • Develop views on how to manage risk regarding portfolio construction and investment strategies
  • Review the underwriting of all proposed investments 
  • Monitor all portfolios and investments from inception to disposition via regular, comprehensive reporting to regional Investment Committees
  • Identify, assess, mitigate, monitor and report on risks facing the overall investment management business 

Additionally, our internal, dedicated Investment Research team is focused on actionable and relevant guidance to portfolio, transactions, and asset management teams. At the highest level, Investment Research consistently informs PGIM Real Estate’s professionals on opportunities and risks. 

PGIM Real Estate has been a signatory of the UN Principles for Responsible Investment since 2009 with consistently high scores for governance, and seeks to embed ESG best practices throughout our risk management processes.

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PGIM Quantitative Solutions designs proprietary equity and multi-asset solutions that seek to solve beyond alpha by combining the latest technology with scalable, rigorous risk controls customized to help solve each client’s evolving challenges. 

Our approach to risk management is built on a comprehensive framework employed to evaluate risk on multiple dimensions including investment risk factors, managing risk, and monitoring risk across each of our platforms and strategies:

  • Investment Risk Factors: Utilizing both proprietary and third-party models we rigorously assess potential risks via both return- and holdings-based analytics to monitor and address portfolio-based risks in real time. 
  • Managing Risk: We employ a proprietary optimizer to construct and regularly rebalance portfolios to maximize potential alpha while aligning with set risk limits and investment guidelines. Our highly diversified strategies avoid portfolio concentration and limit exposure to systematic risks. 
  • Monitoring Risk: Our portfolio management teams conduct regular, proactive risk assessment utilizing both proprietary and third-party risk management tools. This ongoing monitoring allows for swift identification and management of emerging risks, ensuring that performance drivers remain in line with expectations. Our Compliance unit monitors portfolio exposures relative to investment and regulatory guidelines on a daily basis and reports to the portfolio management team when a limit may be breached.
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Jennison Associates specializes in active equity and fixed income investing, applying a fundamental approach to research and security selection. Risk management is integral to how we conduct our business and we believe that as the investment and operating environment evolves, so will the drivers of risk. Our risk framework is designed to identify and mitigate various forms of risk, with controls including systems and process monitoring and periodic risk reviews at senior levels of our organization.

  • Corporate governance: Jennison’s corporate governance processes are informed by our board of directors and Risk Committee, with input from internal advisory groups. Chaired by our CEO, the Risk Committee focuses on emerging risks and operational risk exposures.
  • Investment risk: Jennison’s investment professionals are the primary managers of investment risk. They receive additional support and monitoring through independently generated internal reports and the respective heads of investment platforms. Key areas of investment risk are also reviewed in firm-level executive forums.
  • Investment operations risk: Our dedicated investment services personnel are tasked with ensuring robust oversight and necessary escalation for different aspects of investment operations risk, including counterparty, valuation, liquidity, and emerging risks.
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PGIM Private Capital’s global network penetrates target markets and offers steady deal flows to investors, while building direct relationships with prospective issuers. We have 185 dedicated investment professionals on 47 deal teams and operating in 15 offices globally. 

 

Our Patient, Long-Term investment Strategy is backed by a comprehensive Investment Process.

Credit Analysis / Pricing:
  • In-depth credit analysis of all issuers completed by experienced local teams.
  • Direct origination model allows for one-on-one dialogue with management teams.
  • Relationship-based approach creates opportunities to get to know issuers and prospective issuers at a more granular level through years or even decades of discussions.
Portfolio Monitoring:
  • Most investments contain financial covenants designed to help mitigate downside risk.
  • Multiple dedicated teams of workout professionals to manage distressed investments.
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These materials are for informational or educational purposes only. All investments involve risks, including possible loss of principal. Past performance is not indicative of future results.

The information contained herein is provided by PGIM, the principal asset management business of Prudential Financial, Inc. (PFI), and a trading name of PGIM, Inc. and its global subsidiaries and affiliates.

In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”), information is issued by PGIM Netherlands B.V. with registered office: Eduard van Beinumstraat 6 1077CZ, Amsterdam, The Netherlands. PGIM Netherlands B.V. is, authorised by the Autoriteit Financiële Markten (“AFM”) in the Netherlands (Registration number 15003620) and operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). In Italy, information is provided by PGIM Limited authorized to operate in Italy by Commissione Nazionale per le Società e la Borsa (CONSOB).  In Japan, information is provided by PGIM Japan Co., Ltd. (“PGIM Japan”) and/or PGIM Real Estate (Japan) Ltd. (“PGIMREJ”). PGIM Japan, a registered Financial Instruments Business Operator with the Financial Services Agency of Japan offers various investment management services in Japan. PGIMREJ is a Japanese real estate asset manager that is registered with the Kanto Local Finance Bureau of Japan. In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap. 571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a regulated entity with the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management and an exempt financial adviser. This material is issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act 2001 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Section 305 of the SFA. In South Korea, information is issued by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean qualified institutional investors on a cross-border basis. In Australia, information is issued by PGIM (Australia) Pty Ltd (“PGIM Australia”) for the general information of its wholesale clients (as defined in the Corporations Act 2001). PGIM Australia is an Australian financial services (“AFS”) licence holder (AFS licence number 544946). The information is provided to wholesale investors in accordance with Schedule 1, Clause 3 of the Financial Markets Conduct Act 2013 in New Zealand. To invest as a wholesale investor in New Zealand, investors must fit the criteria as set out in the Financial Markets Conduct Act 2013. In China, the information is provided at your request and is not intended as investment advice or a recommendation about managing or investing assets. 

In Canada, pursuant to the international adviser registration exemption in National Instrument 31-103, PGIM, Inc. is informing you that: (1) PGIM, Inc. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration requirement under National Instrument 31-103; (2) PGIM, Inc.’s jurisdiction of residence is New Jersey, U.S.A.; (3) there may be difficulty enforcing legal rights against PGIM, Inc. because it is resident outside of Canada and all or substantially all of its assets may be situated outside of Canada; and (4) the name and address of the agent for service of process of PGIM, Inc. in the applicable Provinces of Canada are as follows: in Québec: Borden Ladner Gervais LLP, 1000 de La Gauchetière Street West, Suite 900 Montréal, QC H3B 5H4; in British Columbia: Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard Street, Vancouver, BC V7X 1T2; in Ontario: Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite 3400, Toronto, ON M5H 4E3; in Nova Scotia: Cox & Palmer, Q.C., 1100 Purdy’s Wharf Tower One, 1959 Upper Water Street, P.O. Box 2380 - Stn Central RPO, Halifax, NS B3J 3E5; in Alberta: Borden Ladner Gervais LLP, 530 Third Avenue S.W., Calgary, AB T2P R3.

This information is not intended as investment advice and is not a recommendation about managing or investing assets or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. In providing these materials, PGIM is not acting as your fiduciary. These materials represent the views, opinions and recommendations of the author(s) regarding the economic conditions, asset classes, securities, issuers or financial instruments referenced herein. Certain information has been obtained from sources that PGIM believes to be reliable as of the date presented; however, PGIM cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. This information, including projections and forecasts, is current as of the date of issuance (or an earlier referenced date) and is subject to change without notice. PGIM has no obligation to update such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy or accept responsibility for errors. PGIM and its affiliates may develop and publish research that is independent of, and different than, the recommendations contained herein.  References to specific securities are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase, hold, or sell such securities.

Prudential Financial, Inc. of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

© 2026 PFI and its related entities, registered in many jurisdictions worldwide.

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