How do you define "Active Investment Risk Management"?

Active Investment Risk Management uses tactics and systems to actively make decisions to decrease or increase exposure to the potential for loss. 

The investment management industry does not draw accurate distinctions between different activities, so these definitions are my own. When we speak of "active investment risk management" or "active risk management", we necessarily mean a tactic of buying and selling securities (stocks, bonds, commodities) for the purpose of reducing risk (defined as exposure to the possibility of loss). 

Active Risk Management does not mean risk measurement or asset allocation. I define risk as exposure to the chance of a loss. If we have no possibility of a loss, we have no exposure and no risk. Risk is a function of exposure. If we have no exposure to the possibility of a loss we have no risk. Therefore, to accomplish active risk management or active risk reduction, we'd have to sell to reduce our exposure.

Investors could incorrectly confuse these tactics with an active asset allocation function, but it does not fit in the conventional definition of asset allocation which is more fixed. Therefore, asset allocation in its conventional form is not active risk management. Asset allocators instead prepare a fixed asset allocation between cash, bonds, stocks, commodities, real estate, etc.  and call it "asset allocation policy or strategic asset allocation". Asset allocators may try to use similar terminology to describe their methods of asset allocation which are actually not at all a part of active risk management as we define it. Deciding on a policy for spreading capital across different assets and markets is not active risk management. The only risk that asset allocation strategies manage is selection risk: the possibility of an individual position losing value. If you don't have a large exposure to that stock, you may not have a large risk exposure but you'll also have little exposure to a capital gain. Active Risk Management tactics may increase and decrease the exposure to gain and loss by buying and selling. Asset allocators are more concerned with eliminating the risk of a individual position by diversifying it away. Asset allocators diversify away the "alpha" which is the excess return that is possible from a large winner and they seek only the market-driven risk and reward (the beta). Asset allocators are therefore fully exposed to the largest risk: market risk. During bear markets and financial crisis that have occurred many times in the past, all markets tend to fall together at some point. When markets like stocks, bonds, real estate, all fall together diversification and asset allocation methods are of no use in controlling downside losses. The only way to actively control downside losses is to change the exposure. Active risk management systems that control risk are necessary before large losses occur.