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Improving risk governance
We provide institutional-quality risk framework design and harmonized portfolio risk-reporting services, customized to specific client needs. These are particularly suitable for investors that may not have a large internal team available for risk analytics but wish to enjoy the portfolio management and governance benefits provided by a sophisticated risk management function.
An effective top-down risk management framework strengthens governance. It enables the investor to establish a common view of risk and objectives, set and manage appropriate and actionable risk limits, improve portfolio diversification, inform reallocations of capital between strategies/managers and control downside risk.
Actionable insight
Risk reports are produced on a monthly or quarterly basis, depending on the needs of the investor. The reports are designed to be management and board-appropriate, designed around the specific priorities of those stakeholders. Findings are presented in a way that enables effective oversight and decision-making, including clear “alerts” on potential problems.
Analysis is based on a proprietary framework which enables investors to understand the risks within their portfolios, the origins of those risks and how they change through time. A factor-based methodology is used to dissect portfolios–at total-portfolio level, asset class level, strategy level and manager level–into their fundamental risk drivers. The framework is designed specifically to avoid the pitfalls of a pure historic ‘look-back’ risk analysis. It employs Monte Carlo simulations, factor-based covariance and scenario analysis to provide a deeper insight into ‘what could happen’, opposed to ‘what did happen’. The model has been published in the European Journal of Finance (Goodworth & Jones, 2007).
Latest case studies
Policy and Strategic Asset Allocation support
The client, a Middle-Eastern financial institution, sought support for reviewing and creating its...
Risk Management Framework
This Middle Eastern family office engaged bfinance to design an inaugural risk-management...
Risk exposures, diversification and absolute return
The client engaged bfinance Risk Solutions to provide holistic portfolio risk reporting, following...
