Seeing over the market's horizon
We seek to manage risk
in order to capitalize on opportunities and improve our performance.
Disciplined risk estimation and management are deeply integrated components of the
investment process across each one of our strategies.
We believe a
well-constructed portfolio upfront will outperform in good markets and protect
our client’s capital in difficult markets. For this reason, Fourarces has spent
over a quarter of a century establishing risk management as a core discipline.
This approach begins with a dedicated governance group that oversees risk
management. An emphasis on liquid markets, proprietary risk models and a
diversified funding structure seeks to further strengthen our approach.
A Dedicated Risk Manangement
Team
Operating
independently of the investment businesses, and reporting to the CEO, the
Portfolio Construction and Risk Group (PCG) guides the allocation of risk
capital. It is supported by a dedicated R&D team to create custom tools and
technologies.
The Risk Management
Center
Fourarces’s Risk Management
Center provides a comprehensive view of the various investment portfolios and
how they fit within pre-established guidelines. Built in 2014, its front-end
consists of a 27’ by 8’ interactive touchscreen designed to visualize data in
ways that allow for rapid comprehension. Its back-end systems, which connect to
every Fourarces office worldwide, continuously run a wide range of operational
readiness, risk, and stress test monitors.
Run rigorous processes
In pre-trade
discussions, the Portfolio Construction and Risk group works to identify the
impact of potential trades on a portfolio’s risk and stress exposures. In the
ex-post analysis, the group evaluates the skill, infrastructure, investment
universe, risk and working capital utilization of each business, and uses this
information as a part of the risk capital allocation process.
Reinforce the culture
A solid framework is
important, but successful risk management can only be accomplished when it
becomes a central part of the portfolio manager’s analysis of potential trades
and portfolio construction. Continuous communication and collaboration with the
investment teams, combined with an in-depth understanding of the portfolios,
play a critical role in maintaining and strengthening our risk culture.
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