Welcome to the 7th article in our series: “Betting Experts Answer The Industries Biggest Questions.”

This week we open up the debate on what some of our experts have described as the most important topic in sports betting, as we asked nine betting experts the question:

Q7: What are the best ways to manage risk when sports betting?

Check out Part 2 of our answers here, where we get the opinions of pro sports bettors Spanky & Harout Massoyan, author - True Poker Joe and Smart Sports Trader - Ryan Bruno.

MATTHEW TRENHAILE - FORMER ODDS COMPILER

Risk management for betting is a two stage process. First there is establishing the size of bankroll you wish to assign to your betting ventures. Then there is establishing a staking system that meets your personal preferred balance of risk of ruin and profit optimisation. The second stage has already been tackled by this series of Q&A. The first stage can be very simply solved by simply asking yourself how much money are you able to lose betting without it causing you excess discomfort. Everyone’s evaluation of “excess” and “discomfort” will vary. Beyond that risk management is handled by discipline and consistency of behaviour. Providing you bet in a planned, structured and repeatable manner (consistency) with minimal deviation from it (discipline) only using money you can afford to lose you can consider your risk managed.

One thing that will influence both stages of the risk management process is what your goals are. Those who want to be conscious of the success of their betting should spend more time establishing their goals than they normally do. Is it a hobby? Is it a side income? Is it your sole income? Maybe you intend to transition across all of those. The reason this is so important to establish is that one of the greatest enemies of discipline and consistency is frustration. The greatest source of frustration is not getting the outcomes you hoped for. Your risk management tactics must be able to accommodate your goals.

If it is to be your sole source of income you have to ask yourself what risk profile (bankroll and staking) you require to have a good chance of success. Too many betting ventures fail early because the bettor fails to truly understand what they want to achieve and what is required to achieve it. It is amazing how often people with a good staking plan and a profitable method when evaluating the amount of turnover required to ensure a return that meets their goals have grossly underestimated the task at hand. Once you know your goal and the requirements all that remains is mental fortitude which ultimately becomes the lintel that all risk management will rest upon.

One final word of warning is to beware the false sense of security from false diversification. Many bettors believe that because they have multiple different strategies across a variety of sports they are diversified which in turn reduces their chances of experiencing significant down swings. This is not true diversification. This is like saying that an investment portfolio with only shares in is diversified because they have shares from a variety of different sectors. When betting there is only one income source and that is you and your methods. If you want to diversify your betting it means betting on ideas from people who think completely different to you with different methodologies on sports you don’t bet on.

This diversification does not grant you what you want though. People assume diversification grants a reduction in variance by its very nature. In fact people grossly underestimate the impact of all those different strategies going to shit at the same time, which they absolutely will at some point. What people really want is a hedge to their betting when they think of diversification. Something which is negatively correlated so if betting goes bad they will make money elsewhere in much the same way government bonds versus shares are expected to behave (once upon a time).

The best hedge for sports betting is guess what? Making money from something that is not betting on sports. If this thing is to be a reliable hedge it will require you to give it as much attention as you do your sports betting. This still does not prevent losing your job and going on the worst betting run ever at the same time. So guess what? You better learn to embrace variance from the get go and be prepared to have your resolve tested constantly. The best risk managers understand this. Risk management is all in your head.

Check out Matthew’s podcast Inside Betting’ here.

JOSEPH BUCHDAHL - SPORTS BETTING ANALYST

Managing risk is about understanding and managing variance in betting outcomes. The longer the odds, the greater the variance. The smaller the sample, the greater the variance. So two things you can do to reduce variance are to make shorter-priced bets (or hedge them) and to place more of them. Of course, advising such a strategy runs the risk of encouraging problem gambling, so there is one very important risk management strategy that trumps all the others: don't bet at all if you can't afford to lose. Most of you reading this will lose in the long run no matter how untrue you think this statement to be.

Follow @12Xpert on Twitter& check out the 12Xpert website here.

NENKO - THE CHURCH OF BETTING

The obvious answer to this one would be by optimising your staking plan as much as possible. On a broader scale, a punter should of course never bet with more than he can afford to lose.

However, an often-overlooked aspect of risk management in betting is the psychological side of it. Losses are not only measured by the amount of money that comes out of your pocket, but also with the discomfort that they subject you to. Therefore, I think a good way to manage risk is to be psychologically prepared, by being aware of the drawdowns that could be expected with the current betting strategy. Furthermore, it helps to gather some experience before betting large amounts of money. Getting through your first big drawdowns is usually painful, but also helps you to wise up and come to terms with the inevitable volatility of betting markets.

Follow @ChurchOfBetting on Twitter & check out The Church of Betting website here.

PETE LING - FOUNDER OF SMART BETTING CLUB

Bankroll management is absolutely key when betting and ensuring you are set up to both encourage sensible growth but to also prevent yourself from going bust. From a tipster point of view, it's important to ensure you have a handle on the strike-rate, average odds and the ensuing losing runs that you might experience given that. For example, we recently reviewed a racing tipster with a fantastic 25% ROI dating back to 2012. Yet within that, given he has a strike-rate of just 13.62% (a little over 1 in 8 bets win), our monte carlo simulations suggested there was a 50% chance of a drawdown of 41 points within any given year. If you didn't have the bankroll to cater for at least that size run (and preferably a much bigger bank yet) then you run the risk of going bust.

That all might sound obvious but you would be surprised how hard it can be in real life with real money when you are 41 points down and you can't see where your next winner is coming! Hence why bankroll management comes in to help and also to ensure your expectations are in check. The other way to manage risk is to work out where you sit on the risk tolerance scale as we all have different approaches to how we handle risk in everyday life and that often applies to our betting too. It is important to state there is no 'right' or 'wrong' risk tolerance level as it's very much dependent on our individual preferences and characteristics.

With this in mind, a few months back we published a special feature and questionnaire on risk, so each SBC member could gauge their approach. It has been interesting to see the results thus far. Whilst the majority of people (71%) answered the questions in such a way to suggest they had a moderate risk tolerance, 14.5% of people fell either in the category of low or high risk tolerance respectively. This is important to know as if you identify as having a low risk tolerance for example and set up your staking in a high risk manner - chances are you will suffer when a bad run hits and not be able to weather the storm. Making sure you stake in line with your risk tolerance is therefore a crucial part of betting and managing 'risk'.

Follow @SBCinfo on Twitter & check out the Smart Betting Club website here.

JAKE - HOST OF THE BUSINESS OF BETTING PODCAST

When I see the word risk with sports betting, I immediately think of risk of ruin. Systematic and structural measures should be put in place to avoid ruin, such as bet sizing and comprehensive analysis of bet history to ensure you are meeting your set criteria. In addition and as critical, consideration of the emotional swings that arise in the course of betting is required. Navigating the emotions of winning and losing can be difficult and also add additional risk to protecting your ability to maximise your edge.

Follow @BettingPod on Twitter & check out The Business of Betting Podcast here.

Check out Part 2 of our answers here, where we get the opinions of pro sports bettors Spanky & Harout Massoyan, author - True Poker Joe and Smart Sports Trader - Ryan Bruno.

Love getting the opinions from experts in the betting industry? Then subscribe to the Trademate Sports Podcast, where we interview the most important people in the sports betting industry.

Here are the other questions we have got our industry experts to answer so far:

• Q1: Top 3 tips for betting beginners? Part 1 & Part 2.
• Q2: How do you define “finding value” in betting markets? Part 1 & Part 2.
• Q3: How do you determine whether your betting results are based on luck or skill? Part 1, Part 2 & Part 3.
• Q4: Kelly criterion or flat staking: Which stake sizing strategy do you consider to be the best and why? Part 1, Part 2 & Part 3.
• Q5: What is the best method to use to make money from sports betting? Part 1 & Part 2.
• Q6: How difficult is it to beat the sports betting markets? How efficient are the odds? Part 1, Part 2 & Part 3.
• Q8: Is there a best sport to bet on? If so, what is it? Part 1, Part 2 & Part 3.
• Q9: Assuming you have an edge, at what point can you start accurately evaluating your results and say that variance has played out? Part 1 & Part 2.
• Q10: What is the one thing you would like to see change in the gambling industry? Part 1 & Part 2.
• Q11: Do you think emotions play a part in people's sports betting results? If so, how should they overcome this? Part 1 & Part 2.
• Q12: What are the top 3 mistakes people make when betting? Part 1, Part 2 & Part 3.