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Risk management with the overall strategy in mind

Risk Navigator: Strategic Risk Management service for sovereign wealth funds

As an independent specialist Ortec Finance offers the Risk Navigator service, a strategic risk management service for sovereign wealth funds.

The Risk Navigator provides institutional investors with a clear framework that provides an up-to-date overview of the financial risks from a holistic balance sheet perspective, including a periodic guidance on how and when to manage these risks. This means the service has a clear signal function. The Risk Navigator has a modular setup, so that it can be made to fit the specific needs of any sovereign wealth fund. Its findings are presented in an attractive, interactive format that is accessible on multiple devices (including tablets).

Managing investment portfolios is a complex process. There is a tendency to focus on the micro level, whereas macro-level decisions usually have a greater impact on risk and return. It is important for pension funds to regularly evaluate the strategic risks their plan faces, driven by changes in financial position or market circumstances. To what degree are long and short term strategic objectives still feasible? Are risks still within the risk budget? How did market circumstances develop over time, what does this mean for the short or medium term risk and return outlook, and how could the fund translate this in its (dynamic) investment policy?

Consistent ALM simulation software

Ortec Finance Risk Navigator service provides insight in these relevant questions for sovereign wealth funds and fits seamlessly in the overall Strategic Risk Management process. It covers the feedback loop of evaluation of the specific pension fund objectives and risk appetite, as formulated in the ALM phase. For this purpose, Ortec Finance uses a consistent ALM simulation software (GLASS) including OFS, replicating integrated long and short term risks and returns. The Risk Navigator service can be provided on a monthly, quarterly or annual basis.

The Risk Navigator service provides a clear signal function, including guidance on how to manage risks

Key Features Risk Navigator service for sovereign wealth funds

Strategic risk management

  • Strategic risk management process based on consistent short and long term assessment of risk and return
  • Keep track of strategic objectives and risks, including communication with stakeholders
  • Signal function from a holistic balance sheet approach
  • Periodic guidance on how and when to manage risks

Reporting

  • Ensure all stakeholders receive appropriate reporting
  • Visually display the key risk analysis
  • Interactive format (e.g. for tablets)

Risk analyses

  • Simulation of balance sheet with large number of scenarios
  • Identify most important risk drivers
  • Improve understanding of balance sheet dynamics
  • What-if analyses to assess impact of policy alternatives

GLASS

GLASS is an asset and liability scenario solution that improves financial decision making by simulating the short and long-term effects of strategic investment decisions.

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