How to Solve Common Buy-Side Valuation and Risk Challenges – Part II
A few weeks ago I wrote a blog post exploring a couple of the common challenges that our clients faced before working with us. These include relying on error-prone spreadsheets for valuation and risk calculations, and the inconsistency and high costs associated with using multiple valuation systems.
Today, I’d like to cover two more key challenges that we are helping our clients overcome.
Inflexible or Outdated Valuation and Risk Systems
As firms seek better returns and look to enter new asset classes, one of the biggest challenges relates to technology. Firms are finding that diversifying their portfolios places heavy demands on their portfolio analytics and risk systems, which were simply not designed to accommodate multi-asset trading strategies. They need solutions that give them the freedom to expand into new asset classes now, and the flexibility to support alternative strategies in the future.
Many of our clients chose FINCAD F3 specifically to enable their entry into new asset classes and instruments. This has allowed the consolidation of multiple valuation and risk systems into a single platform, and provides consistent valuation and risk results across the enterprise. Sophisticated valuation and risk solutions like FINCAD F3 are desirable because they can implemented quickly, integrated into their existing systems, and customized to their workflow giving firms flexibility and control they need to easily expand into new markets and asset classes.
Lack of Intra-day Risk Reporting
More and more, firms need intra-day portfolio risk reporting so they can better respond to market changes and manage their risk accordingly. Unfortunately, many firms’ legacy systems are just not capable of providing intra-day risk numbers.
Today’s top-performing firms know that when risk analytics are incorporated into regular trade-decision workflows, the rewards include better trading decisions, better returns, and optimized capital deployment. In fact, many FINCAD clients originally approached us seeking intra-day risk capabilities. And we have delivered.
FINCAD F3 provides risk analytics that not only help monitor your portfolio performance, but truly drive it. This is done with intra-day reports that include scenario analysis, Value at Risk (VaR), marginal VaR (MVaR), incremental VaR (IVaR), conditional VaR/expected shortfall, cash flow forecasts and stress tests. Many of our clients are now enjoying significant benefits from improved risk management and capital usage.
In the current environment of persistent risk and instability, having access to timely, accurate risk information will enable you to rapidly respond to change, and help you secure a competitive edge.