Portfolio Technology Gets Risk-Savvy09.09.2011
Software providers are embedding risk management into their platforms.
Regulatory changes and increased demand for transparency are compelling asset managers to demonstrate robust processes around compliance, audit and risk. That’s prompting software providers to embed risk management technology into their platforms.
“With respect to investor pressure, the due diligence process requirements have become more onerous in terms of operational and trading processes, Trevor Headley, global head of product strategy and delivery at Tradar, told Markets Media. “Without the right technology solutions in place, satisfying these requests will carry a significant operational overhead.”
Tradar, a provider of portfolio management and accounting software, has launched a fully-integrated “risk engine” with the latest version of its flagship product, Insight.
The new risk functionality delivers increased transparency of risk and performance drivers within the portfolio, with on-demand analysis of exposure risk and performance including counterparty, liquidity and currency exposure.
The suite combines Tradar Insight’s key performance measures with Lodestar Tungsten’s risk analytics platform.
“We have partnered with Lodestar to integrate their purpose built risk engine,” said Headley. “The integration is not simply a one way push of portfolio data from Insight to Tungsten, but rather a bidirectional flow of data with the output of the measures and analytics produced by the Tungsten risk engine seamlessly flowing back into the Insight application.”
The benefit of this approach is that users continue to take advantage of the advanced reporting capabilities of Insight while working in a familiar environment. It also allows Tradar to provide consolidated reporting for a complete view of risk and return.
The tools which Tradar has developed are aimed at reducing the amount of time taken to deliver comprehensive reporting. “On a global basis, the regulatory environment has become more stringent for managers from AIFMD in Europe to Dodd Frank in the U.S.,” said Headley.
The performance analysis reporting engine includes a number of measures to provide more detailed analysis of performance and exposure reporting, standard deviations and also number of attributes on which the portfolio can be reported, said Headley.
This allows users of the system to drill into the performance of the portfolio on both time and attribute dimensions.
Fragmented legacy risk systems are hampering firms’ ability to respond to increased volatility.
Value at Risk has an enhanced capacity to adapt to market volatility.
The suite enables GAM to seamlessly manage market risk exposure and liquidity and investment risk.
The clearinghouses will be using a VaR methodology.
The enhanced margining model strengthens resilience and boosts capital efficiency.