The are about three main sources of

Therole of the fund managers is very important for increasing efficiency andstability in the market but under some circumstances it may cause a systematic risk.There are three sources of systematic risk in the financial system which arisesfrom fund management; insufficient credit risk transfer to fund managers; runson funds that cause sudden reductions in funding to banks and other financial entities;and contagion through business ties between fund managers and their sponsors. literatureReviewAccordingto the author Elias Bengtsson the main purpose of the study is evaluating fundmanagement and systematic risk.The fund managers play very important role inthe financial market as they are responsible for increasing the efficacy anddurability in the market but with all these good contributaions of the fundmanagers in the financial market there are few circumstances which later becomethe cause of systematic risk and severity of financial crisis. Global financialcrisis give us a more clear idea of how financial managers contribute towardssystematic risk.

There are about three main sources of systematic risk in thefinancial market that are possibly arised from fund management, that areinsufficient credit risk transfer to fund managers , Funds that cause suddenresuctions in funding to banks and other finanical entities ,Contagian throughbusiness ties between fund managers and their sponsers. All of these three arethe main sources of systematic risk and there are several ideas are suggestedto reduce the systematic risk.This article is also about the the experiencesfrom the Globa finanical Crisis (GFC) to know more effectively how fundmanagement become the cause of systematic risk. The main role of the fundmanagers is to attain high risk-adjusted returns for their clients. GFC haspointed to a number of ways that FMs contribute to systematic risk and theresent used different rearches to distinguish and discuss three ways in whichFMs contribute to systematic risk. They also discuss two types of fund managersTraditional fund managers(TFMs) and other are Hedge funds(HFs).These systematicrisks were previously ignored by the policy managers.Kinga and Maier(2009)notes that destructive channels between banks and HF are mostly intersecting.

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After these systematic risk were highlighted the policy makers are not idle andget to work to minimize the systematic risk in order to enhance their bankperformance.The main policy work is done by FSB’s program on Shadowbanking(2012).there are several other initiatives were taken to reduce the riskof runs on funds.A committee has been created called Basel committee which makesure the risk is minimum and strengthened the organization.

Still after all ofthese measurements the question is still open that will these all strategiesreduce the risk from Financial managers.All of these strategies are not fullyimplemented and it is still not sure that these strategies to reduce the riskcan help or will not help at all or may help upto some extent.To get an answerto this question we will have to wait and implement all these strategies to getthe results.

But the extent of effectiveness is still a question and will onlybe answered after strictly implimentations of the strategies.History told usthat the business which provide financial services are greatest and the risk isvery low. At the end of this discussion the policy makers are left with a bigjob to find the most effective strategies to create a right balance between thesystematic risk.

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