Managing Risk

I really liked the way you have explained the concept of risks in mutual fund investing via your cover story. However, I would like to know how should I manage those risks?
- Parmit Chaddha 

Editor Responds : The first step towards managing your risk is to understand your risk appetite. You can understand this by comprehensive risk profiling. Once you have understood what kind of risk you can take, it is quite easy to manage risk. The next step would be to understand your investment horizon. These two factors will help you pick funds that not only suit your risk profile but also your investment horizon. As a result, you will undertake risk that suits your temperament.