Welcome To The Latest RiskSystem Newsletter
Current Observations and Musings

It seemed a particularly quiet summer – at least until the end of August. Perhaps economic recovery meant more people were on vacation. Or maybe the regulators decided we all needed some time off to digest all the recent legislative changes – fat chance! Still Greece did provide some excitement early in the summer but to us the big risk has always been, and continues to be, developments in China – you can read our view  on why China matters to the global economy and hence the financial markets here. We did some work over the summer using intra day (hourly) stock prices and found that rising correlations gave a clear warning just before the Chinese market began its descent. Interestingly the end of day data did not give a similar signal. Drop us a line if you are interested in knowing more.

During volatile periods such as the markets are currently experiencing the efficacy of VaR models are often questioned. Our view is that VaR is a useful tool for monitoring and managing risk but it is only one of a number of tools in the risk managers toolkit and needs to be utilised with other risk metrics such as stressed VaR, scenario analysis and stress testing. You can read our thoughts here. We also explore the eligibility of Exchange Traded Commodities (ETC’s) for UCITS purposes here.

Over the summer we have produced a new corporate brochure which can be downloaded here. At the core of the brochure is an emphasis on RiskSystem’s value proposition to our clients:

• Reducing your business and regulatory risk
• Growing your business whilst reducing your overall costs
• Improving your client offerings

It was natural that we would expand our product offering as clients discover the benefits of having clean, enriched data stored securely in one place[1] (and not on a multitude of pesky spreadsheets that can potentially lead to increased operational risk – in other words “death by spreadsheet”). As an example a client a while back asked if we could help with their fact sheets. Given we have all the client data already (independently sourced daily from their administrator), for us it is a simple click of a button to produce the various metrics required (risk and returns numbers, graphs etc.). All the manager has to do is send us their investment commentary and job done. This is proving particularly popular to the platforms (AIFM’s and UCITS) for whom we provide risk services to. They are able to offer a deeper service further embedding their clients. We can also offer a compelling and cost-effective pre-trade compliance service.

Similarly we were delighted to be appointed as the permanent risk management function for IRES Fund Management Limited (manager of IRES REIT which “purchases and accumulates high quality apartment assets to let in the greater Dublin area”). In addition to the risk management services we are providing, RiskSystem personnel are assuming several managerial functions such as internal audit, monitoring compliance, risk management etc. Ian Murphy is acting as the compliance officer and holding other management functions. Furthermore we can also offer MLRO services. So we can now offer clients a comprehensive one-stop risk, governance and compliance solution.

RiskSystem UCITS Solution
We have also produced a new fact sheet highlighting the RiskSystem UCITS solution (see here). This highlights our competitive advantage in having a complete UCITS risk solution with data analysts and risk analysts independently producing risk metrics, (VaR, commitment etc.), stress tests and other value added services such as SRRI calculations etc.
Central Bank Themed Inspections
The Central Bank has outlined its “programme of themed inspections in Markets Supervision” – see here
It appears that risk management is moving up the agenda as the CBI intends to undertake specific themed inspections on risk management in UCITS.

“Risk management in UCITS – Examination of the on-going application of risk management processes employed by UCITS”

If you feel your UCITS fund has gaps in the risk management process do please get in touch with us and we would be delighted to carry out a no obligation gap analysis.
As ever please contact us info@risksystem.com or click here for further contact details to learn more about our risk management solutions.
[1]Technically all our data is not held in one place for obvious reasons but is in fact stored in several secure encrypted locations in Canada, Ireland, Germany and France.

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