Investment Risk Management
Using a Wide Range of Monitoring and Measurement Approaches to Manage Risk at the Firm and Client Level for Investment Portfolios
Managing risk is a key component of all of our investment processes. Risk management ultimately starts at the client level, where your client service team will work with you to understand your liquidity needs, risk comfort, target returns, and other unique factors that drive the construction of a portfolio appropriate for your unique situation.
At the broader firmwide level, our investments team is reviewing performance, monitoring managers, and regularly revisiting the assumptions underlying each investment decision in order to assess the diversification and risk among our managers. We utilize software models that can run stress tests on example portfolios to evaluate the impact of different market shock events. The Investment Committee is consistently focused on managing market risk, manager risk, concentration risk, and liquidity risk in general across our recommended investments. For certain investments, it also is important to monitor and manage leverage risk, interest rate risk, sovereign risk, and derivative risk. Operational due diligence and monitoring helps to address any concerns about how an investment manager is managing their own internal operation, including confirming the usage of independent auditors, third-party administrators, and outside counsel as well as an assessment of any valuation techniques if a private investment is involved.