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Risk Management for Institutional Investors: Fulfilling Fiduciary and Strategic Responsibilities - Product Image

Risk Management for Institutional Investors: Fulfilling Fiduciary and Strategic Responsibilities

  • Published: October 2013
  • Region: Global
  • Risk Books

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.

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 READ MORE >

Foreword

Introduction

About the Authors

1. 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

2. 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

3. 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”)

4. 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

5. 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

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

7. 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

8. 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

9. 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

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

11. Practitioner Insights

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

References

Index

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