Hedge Funds: Are You Managing All The Risks?

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Are you managing all the risks? Hedge Funds: Copyright © 2013 Advent Software, Inc. All rights reserved.

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In the wake of the financial crisis, managing risk has become a critical issue for hedge funds. Today hedge fund managers must manage historical risks and new and emerging risks, as well as respond to a changing investor mentality and regulatory environment.

Transcript of Hedge Funds: Are You Managing All The Risks?

Page 1: Hedge Funds: Are You Managing All The Risks?

Are you managing

all the risks?

Hedge Funds:

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Page 2: Hedge Funds: Are You Managing All The Risks?

This communication is provided by Advent Software, Inc. (“Advent”) for informational purposes only and should not be construed as or relied on in lieu of, and does not constitute, legal advice on any matter whatsoever discussed herein. Advent shall have no liability in connection with this communication or any reliance thereon.

Copyright © 2013 Advent Software, Inc. All rights reserved.

Advent and the ADVENT logo are registered trademarks of Advent Software, Inc. All other products or services mentioned herein are trademarks of their respective companies. Information subject to change without notice.

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Managing risk is a

critical focusfor all fundmanagers.

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Page 4: Hedge Funds: Are You Managing All The Risks?

But hedge fund managers face

historical risksemerging risks.

as well as new

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MarketRisk

CreditRisk

LiquidityRisk

ReputationRisk

CounterpartyRisk

Country, Currency,Political

Risk

Issuer /NameRisk

OperationalRisk

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What’s it take tomanage that risk?

5 hurdlesHere are

to effectiverisk management.

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Page 6: Hedge Funds: Are You Managing All The Risks?

Finding and reporting on

The tendency of portfolio managers to work independently, combined with IT system limitations, can result in asset-class silos operating within a firm,

making it difficult to obtain an accurate enterprise-widepicture of exposure.

1 firm-wide positionsacross asset classes.

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Page 7: Hedge Funds: Are You Managing All The Risks?

Evaluating and quantifying2

With trading speed constantly accelerating, evaluating the risk counterparties pose—and the resulting threat of defaults—

at any given moment becomes a monumental undertaking.

counterparty risk.

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Page 8: Hedge Funds: Are You Managing All The Risks?

Reconciling datafrom various counterparties.3

Getting accurate data in a timely, automated fashion from a myriad of trading counterparties and back-office service providers can be difficult

and time consuming. The firm then needs to reconcile the data received and address outstanding issues, further complicating the task.

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Page 9: Hedge Funds: Are You Managing All The Risks?

Real-time data feeds, trade information and position monitoring are not always available, especially when dealing in emerging markets.

real-timeexposure reporting.

4

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Difficulty getting

risk and

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Determining the fair value of an infrequently traded, custom-builtOTC derivative or complex loan product can be problematic.

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Valuingsecurities and portfolios.

illiquid5

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Overcoming these hurdles requires a

robust and

sophisticatedtechnology architecture.

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Once in place, your IT framework can enable a variety of key

best practicesincluding…

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Value-at-Risk capability

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Real-time reporting

Intra-day

and more…

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Learn more about Evolving Hedge Fund Risk and howto Create a Best Practices IT Framework.

Download the free white paper from Advent Software.

www.Advent.com/HedgeFundRisk

Copyright © 2013 Advent Software, Inc. All rights reserved.