The methodology of risk analysis for hedge funds is extraordinarily complex. This is not only due to the heterogeneity of this investment form but also because neither investors nor advisors are familiar with it. Alternative investment forms like hedge funds are currently trending, as they are most capable of meeting high return expectations. Therefore, risk analysis of hedge funds is one of the most important topics in the industry. There are fundamentally different approaches to this, all of which the author presents, examines, and evaluates. Martin Fluhrer, a business economist and financial and investment economist, has been working for several years in consulting and supporting private and institutional investors for a large German investment company.