Research conducted by Sophis, a provider of cross-asset, front-to-back risk and portfolio management applications, has revealed that 63% of asset managers believe that risk management requirements have changed as a result of recent market volatility, with a further 35% saying they have changed ‘significantly’. The Sophis study surveyed 140 professionals at the recent Lepus seminar held in London, Risk management for Asset Managers: is 2009 an evolutionary turning point?
Other key findings include:73% believe it is essential to have an integrated view of risk that includes derivatives75% will increase the volume of stress tests and VAR reports that they carry out65% will improve pricing and data models
The panel of expert speakers at the Lepus seminar debated how the asset management industry needs to change in 2009 in response to the economic crisis. They outlined how complex risk management has now become for asset managers and why an integrated view of risk is no longer a ‘nice to have’ but a ‘must have’. There is an urgent requirement to rebuild investor confidence in investment decisions and to provide a more transparent view of financial performance.
Sophis also asked delegates at the seminar what would be the most important consideration when investing in new risk management tools.
The findings were as follows:Real-time consolidation of net asset value (NAV)Range of simulation and risk scenariosFund returns analysis and performance attributionCross-asset value at risk (VAR)
“The buy-side recognises that it needs the same robust systems and processes as the sell-side, regardless of whether new regulation is introduced or not,” syas Sebastien Roussotte, COO Sophis UK. “Institutional and retail investors alike need to have confidence that their investments are being well-managed. Asset managers and hedge funds will increasingly be asked for transparency and regular reporting not only about performance of their funds but also about the risks that are being taken.”
Sophis VALUE combines portfolio, middle/back office, data and risk management capabilities across all asset classes, including complex derivatives. Asset managers are provided with the front-to-back support they need to monitor and report their NAV and risk, manage their positions and automate their operations. Sophis has worked with buy-side institutions since 2001 and VALUE is currently in use at over 80 institutions worldwide, from start-up hedge funds to global investment management companies.
D.C.