Risk Management

Independent risk management and investment compliance

Investment funds need to implement internal processes and build systems that help them measure, control and manage risks associated with their investment activity.

A key requirement is that risk management should be functionally and hierarchically segregated from portfolio management. For many investment managers, particularly smaller entities, it is not easy to re-structure their organisation in this way without adding new personnel.

Outsourcing risk management makes it more meaningful

You may outsource to PCM the mandatory risks identification, measurement, monitoring and reporting, through our PearlSynt cooperative technology. Our services include management of financial risk, market risk, credit risk, counterparty risk, liquidity risk and operational risk.

Our risk management practices of the higher standard are a differentiating factor, which can be effectively communicated to those investors who ask for the integration of risks in their performance calculations.

Aligning your fund’s risk, compliance and control with the industry best practices

We help our clients stay compliant with AIFM and UCITS risk obligations and improve their risk and liquidity management functions. We cope with all aspects of the regulatory requirements, including the supervision and tight monitoring of the delegates.

Through its state-of-the-art Risk management service, accessible via our PearlSynt cooperative technology, PCM is responsible for the adequacy and permanent monitoring of the Fund’s risk management by overseeing the risks inherent to the instruments used by the Fund, thus performing a role of control and due diligence.

We set up a variety of monitoring tools and other risk management tools and processes in order to verify that fund transactions and operations comply with the applicable investment policy and legal restrictions.

Forward-looking and proactive

Our Risk management process seeks to identify management material risks that might impact the fund, the likelihood of them occurring, and the extent of their impact should they occur.

A process, not a project

We consider that Risk management is not a one-time or periodic assessment of risks. Rather, it should be an on-going part of business operations carried out in real-time.

A recurring cycle of identification, measurement, monitoring and reporting of risks

Our well-structured controlling and reporting systems available through our PearlSynt cooperative technology, guarantee an effective assessment and management of financial risks and involve a full range of risk indicators adapted to each risk profile, the asset class as well as the investment strategy of each fund. It provides an on-going monitoring of the risks related to the fund portfolio, through indicators such as VaR, commitments, back testing and stress tests. It takes into account the best market practices and complies with the general ALFI and ESMA guidelines. In addition to market risks, operational, counter-party and liquidity risks are also monitored. We provide valuation support, ensure regulatory notifications and identify solutions in case of breaches.

Risk management services offered

Our risk management implements all aspects of the regulatory requirements, including the supervision and tight monitoring of the delegates:

Fund Risk profiling Process the on-going risk management
  • Identification and customization of the risk factors and policies when drafting the prospectus
  • Inventory of delegated activities and assessment of operational risk impact
  • Implementation of oversight and operational risk monitoring matrix, streamlined over the various components of risks
  • On-going measurement and monitoring of portfolio risk
  • Post-trade compliance including the monitoring of portfolio investment restrictions
  • Risk limits/risk appetite
  • Risk modelling and risk aggregation techniques
  • Regular control of fund asset evolution
  • Independent supervision of the NAV
  • Performance assessment of the investment manager
  • Prepare the counterparts and delegates monitoring
  • Production of risk management reports
  • Computation of various risk measures – global risk exposure (Commitment, VaR), standard ex-post ratios…
  • Calculate the SRRI when preparing the KIID
  • Prepare and escalate the monthly risk management executive reporting

Our SyntRIC Risk & Performance system clears communication and effectiveness

Our SyntRIC integrated in our PearlSynt system offers a wide range of risk indicators tailored to your risk profile, the asset class and the investment strategy of your fund. It establishes clear and open lines of communication, which helps ensure that certain risks do not fall through the cracks and that risks data and information is fluidly flowing between business units.