Risk Culture and Effective Risk Governance

Risk Culture and Effective Risk Governance

Risk Model Validation (2nd Edition)

Risk Model Validation (2nd Edition)

Risk Management for Institutional Investors


Risk Management for Institutional Investors: Fulfilling Fiduciary and Strategic Responsibilities addresses how board members, directors, trustees, and members of the C-suite overseeing a pension or endowment fund can properly manage and mitigate risk. It details on a practical level how the necessary data can be collected and reported to this governing board within the broad framework of current risk management practices.

This holistic executive report will include discussions of risk appetite, risk governance, board risk communication, and board risk training, and will address how highly technical and granular data can be synthesized so that it can be reported to a board that may only meet for three hours every three months, in turn informing the decisions the institutional investors make.

Availability: In stock

Increasingly institutional investors have been using hedge funds in their portfolios, and as they move more into these alternative investments, their data collection and reporting will become more complicated as the requirements of alternative investments are more demanding. A high degree of investment analysis is needed before buying, and there is a limited amount of historical risk and return data available for this type of investment. Institutional investors will need more help understanding and mitigating the risks involved.

You are provided with information regarding pension fund and endowment risk management techniques, which will also be applicable to trustees of other institutions with large investment portfolios. This compelling report teaches you:

  • How to institute a new framework for risk management for pension funds and endowment funds.
  • What are the key factors to monitor (including data collection, risk reporting and governance).
  • How to identify and report on the most critical emerging issues and information to oversight boards.
  • To introduce checklists for practitioners to benchmark the practices of their organizations.
  • How to fit this framework into a holistic governance framework.

Risk Management for Institutional Investors will provide many checklists for practitioners to benchmark their organization’s practices. This is imperative for overseers (board members or trustees) as well as for those reporting to them. Readers will have a better understanding of how a risk management framework fits into a complete governance framework, and will also have a roadmap of the key risk analytics tools and how they can be harnessed to provide oversight boards with a better understanding of the effective control of risks.

Risk Management for Institutional Investors is an essential good practice guide for board-members and the people who report to them, addressing best practice compliance issues and giving comprehensive and straightforward strategic investment guidance.

More Information
ISBN 9781782720386
Navision code MIIR
Publication date 18 Nov 2013
Size 155mm x 235mm
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Richard Horwitz and David Tyson

Richard Horwitz is a Managing Director at CMRA (Capital Market Risk Advisors), a risk management firm providing consulting and litigation support services to major US and international financial services companies and institutional investors. Richard first joined CMRA in 1999. He has been developing and commercializing innovative risk management and transparency solutions and since January 2002, has been President and CEO of Risk Fundamentals LLC, a company that develops risk management and transparency software for hedge funds and their investors. Richard has also worked for Merrill Lynch’s Hedge Fund Development and Management Group, Kenmar Global (Director of Risk Management and Portfolio Analytics), Booz Allen and Hamilton (Consultant in financial services practice) and Sanford C. Bernstein (equity analyst).

David Tyson is a Managing Director at CMRA, a risk management firm providing consulting and litigation support services to major US and international financial services companies and institutional investors.  Dave joined CMRA in 2010.  Dave’s expertise covers insurance portfolio and asset liability management, design and management of investment organizations, registered investment advisor oversight, and risk management.   His areas of expertise include detailed experience in all fixed income asset classes, derivatives, alternative investments, and equities.  He also has significant background dealing with corporate strategy issues for insurance companies and asset management firms and has been heavily involved in pension fund management issues.   He has worked for Travelers /Citigroup (Chief Investment Officer of their insurance units, head of one of their registered investment advisors and member of Pension Investment and Global Asset Liability Committees), Equitable Investment Management Company, RiversEdge Portfolio Advisors, and Copeland Funds Management.  He has also been on the board of CYS Investments, a mortgage REIT, since 2006 where he has served as Lead Independent Director and Chairman of the Audit Committee.

About the Authors

What are the Current Risk Governance Practices of Institutional Investors?
- Profile of the Respondents
- Exposure to Complexity
- Risk Governance
- Chief Risk Officer Role
- Risk Management Resource Allocations
- Summary

Practitioner Insights
- Leslie Rahl
- The Fiduciary Challenge
- Managing Risk (not Avoiding It)
- Risk Visualisation/Communication
- Asking the Right Questions
- The Value of Value-at-risk
- He Who Does Not Learn from History Is Doomed to Repeat It
- Akshaya Bhargava

Risk Leadership
- Risk Perspective
- Risk Culture
- Risk Strategy
- Risk Appetite Statement
- Risk Budget
- Risk Governance
- Risk-based Compensation
- Summary
- Case Study: Aligning Data Transparency with the Governance Framework
- Conclusion
- Appendix 3.1 Annuity Portfolio: Investment Policy Statement
- Appendix 3.2 Risk Parameters: for Sample Hedge Fund (The “Fund”)

What is the Alternative?
- Focusing on Beta Strategies
- Advent of Alternative Investments
- Deciding to Allocate Risk to Alternative Investments
- Risk Oversight Capabilities Needed for Alternative Investments
- Summary
- Case Study: Practical Portfolio Management Issues When Investing in Alternatives
- Summary

Practitioner Insights
- Select Well-compensated Market Risks – Minimise Exposure to Other Risks
- Disciplined Implementation/Execution of Innovative Strategies
- Analysing a Potential Crisis Is Easy, the Challenge Is Predicting It

Holistic Risk Management
- Trading
- Investment Risk
- Operations
- Technology
- Counterparty Credit
- Valuation Risk
- Investor Relations
- Legal/Regulatory
- Compliance
- Finance/Administration
- Summary

Practitioner Insights
- Creating Effective Communication Between Management and the Governing Board
- Investment Data’s Unwillingness to Follow Rules
- Using the Combined Insights of the Organisation
- Conclusion

Risk Aggregation
- Traditional Investments
- Systems to Aggregate Risk
- Aggregation Is More Than Volatility
- Hedge Funds
- Private Equities
- Real Estate/Resources
- Derivatives/Hedges
- Summary of Conclusions
- Case Study: Building a Robust Multi-asset Class Risk Infrastructure
- Summary

Risk Analysis: Measurement, Monitoring and Reporting
- Individual Holding Risk Information
- Portfolio/Asset Class/Business Risk Information
- Common Factor Risks
- Macro Risk Factors
- Performance Measurement and Analysis
- Environmental Scanning
- Creating an Actionable Information Flow
- Case Study: Investment Risk Aggregation and Reporting

Risk-Efficient Portfolio Construction
- Asset Class Diversification
- Drawdown Diversification
- Passive Exposures
- Active Exposures
- Drawdown Exposures
- Dynamic Portfolio Construction
- Risk Reporting
- Summary

Practitioner Insights

Investor Best Practices
- Hedge Fund Failures
- Achieving Best Practices
- Investor Best Practices
- Summary