Wrenching stock market fluctuations are no longer one-off yearly events, rather more regular occurrences while bond markets are signaling broader economic distress.
Managing risk requires the combined ability to apply gut instinct with tackling analytics on fast-moving data as financial markets serve up an ever-increasing stomach-churning ride.
Whether you are a multi-strategy hedge fund, a mutual fund, insurance company or a bank trading desk, you want to continuously test the components of individual investments and create a picture of risk that is prescient.
These issues came to the forefront for one of our clients, a global hedge fund, among the largest in the world, who manages positions representing billions-of-dollars-worth of investments every day. They needed to be able to decompose those positions on-the-fly and along unpredictable paths, depending on what their analysts were looking for at any given time. Being restricted in how they can perform their analyses or having to wait hours for aggregation calculations to be resolved was simply unacceptable for a firm that counts among the top global leaders in finance.
This required a tool that handles complex calculations such as the measure of risk sensitivities on big volumes of data in real time to support decisions makers before and after a trade is made.
Mitigating Market Risk for One and All
For this client, the cornerstone of their risk architecture has become ActiveViam’s ActivePivot in-memory technology. ActivePivot enables their risk and portfolio managers to easily drill down into data by instrument and position, across funds, or an individual fund to look at a particular allocation and calculate risk measures (such as VaR and vol) within those subsets.
The use case is comparable to how we serve our banking clients. Risk managers at banks that use ActivePivot can drill down into PnL from one day to the next and see the exact metric (market or other data) that contributed to a change in the bottom line, quickly update it and sign-off on the data.
Executing “What-If” analyses to mimic and test concentrated portfolio risks are made easy. Data can be carved out of a main branch to create any number of scenarios, including simulating the effect of liquidating or closing out a position. One scenario can be kept, and the others discarded.
Train-of-thought Analysis as a Rule
In the current environment, risk and portfolio managers alike need the ability to perform flexible analysis on an intraday, if not hourly, basis.
Whether you are running a fund or a bank desk, the ability to drill down to the particularities and provide a detailed analysis to investors or the C-suite is crucial.
ActivePivot allows organizations to perform non-linear calculations on aggregated data at unparalleled speed and immediately see updates on the data as it’s changing.
Our clients can test the impact of incremental changes in VaR or sensitivities on a trade, a particular segment of investments or an entire portfolio and, ultimately, on enterprise-level risk.
It completely transforms the way risk managers work, making train-of-thought analysis the baseline practice and enabling an immediate response to any anomaly.
Capturing Visibility on Fast Moving Data
Performing granular-level analysis on data as it’s updating in real-time to see the results leads to informed decision making at every level of the organization which paves the way for superior risk mitigation. That is part of what keeps our clients ahead of the game.
The scalability and flexibility of the ActiveViam Platform has earned the trust of some of the largest financial services clients in the world who use us to create a real-time environment to manage their enterprise-wide risk.