Risk Management
Operational and investment risk controls.
Risk areas we cover
Risk management spans both investment and operational concerns. The areas below describe the kinds of risk we consider within a mandate, alongside the custody, trading and collateral activity it may involve.
Investment risk
The possibility that market movements or positioning move a portfolio away from the objectives agreed with the client.
Liquidity risk
The risk that assets cannot be realised, or cannot be realised at expected terms, when the mandate requires it.
Counterparty risk
Exposure that arises when activity depends on a trading, financing or settlement counterparty.
Operational risk
The risk of loss or disruption caused by process, people or day-to-day execution within the engagement.
Technology and access risk
The risk that systems, connectivity or access controls interrupt the handling of client activity.
Documentation and process risk
The risk that responsibilities and approvals are not captured clearly enough to be followed consistently.
Identify
Identification starts with the mandate. We look at what the engagement is intended to do, the assets and activities it involves, and the points where those could move away from the agreed objectives. This gives a shared view of which risks are in scope before anything is monitored.
- Map the risks that are relevant to the mandate and its specific activities
- Agree which risks sit with the client and which sit with us
- Note the data and evidence needed to observe each risk over time
Monitor
Monitoring is a continuing activity rather than a periodic check. Positions and activity are observed over time against thresholds set in advance, so that exceptions can be recognised and picked up within the reporting and oversight rhythm of the engagement.
- Observe positions and activity on a continuing basis rather than at a single point
- Compare what is observed against thresholds agreed in advance and flag exceptions
- Feed what is seen into the reporting and oversight rhythm of the engagement
Respond
When something moves outside the agreed thresholds, the response follows a defined path rather than an informal decision. Handling, escalation and communication are set out in advance, and the outcome is recorded so the position is clear afterwards.
- Follow a defined path for handling an exception once it is identified
- Escalate and communicate through named points of contact on both sides
- Record the decision and the outcome so the position is clear afterwards
An illustrative scenario
Consider a financing arrangement where the value of pledged assets moves by a notable amount over a short period. As the value is observed against an agreed threshold, the movement is flagged. An internal review confirms the position and the relevant point of contact is notified so the parties can agree on the next step. The decision and its basis are recorded, and the position returns within the agreed range or is otherwise addressed in line with the documentation.
Illustrative scenario. Actual arrangements are set out in client documentation.
Controls in practice
The controls below describe how risk management is put into practice within an engagement. They are set out in advance and applied consistently.
- Responsibilities and approval limits are documented at the outset
- Thresholds are agreed in advance and reviewed on a set schedule
- Exceptions follow a defined handling path rather than informal decisions
- Decisions and their outcomes are recorded for later reference
- Reporting connects what is observed to the oversight rhythm of the mandate
Related services
Discuss your risk requirements
Speak with our team about how risk controls could be structured around your mandate, your governance and the activity the engagement involves.
Speak with our team