Our risk modeling implements mathematical models to assess the risk of different investments in our portfolios. Our models consider factors such as volatility, liquidity, credit risk, and market risk. The results of the modeling can inform investment decisions and help investment companies optimize their portfolios. We perform stress tests to evaluate the impact of different market scenarios on our portfolios. This involves simulating different market conditions, such as economic recessions or market crashes, and assessing the potential impact on the portfolio. This helps us identify potential weaknesses in our portfolio and adjust our investments accordingly.
We incorporate scenario analysis to evaluate the impact of specific events on their portfolios. This involves analyzing how different market events, such as changes in interest rates or commodity prices, could affect the portfolio. Scenario analysis can help investment companies make informed decisions about their investments and mitigate potential risks. We also perform value-at-risk (VaR) analysis which is a statistical measure of the potential loss that a portfolio may incur over a specified time horizon at a given confidence level. We use VaR analysis to measure the risk of our portfolios and set risk limits.
We continuously monitor our portfolios for changes in risk. This involves reviewing market trends, analyzing investment performance, and identifying potential risks. We use risk monitoring to adjust our portfolios and make informed investment decisions.