Northern Trust bolsters risk management reporting
18 September 2013
Category: News, Global
By Asia Asset Management
In response to the expanding and increasingly sophisticated risk management needs of institutional investors, Northern Trust has enhanced its ex-ante – or ‘forward looking’ – investment risk reporting capabilities, it announced on September 17.
Pension funds, for example, now have access to broader and deeper risk analysis including more integration between analysis of investment risks and the impact they may have on the fund’s ability to meet its liabilities at a future point in time, says the firm.
“Our next generation risk reporting services have been developed to provide our clients with increased risk awareness which will facilitate better investment decisions,” said Ian Castledine, global head of investment risk and compliance product for Northern Trust. “A key step forward has been made in bringing together the analysis of investment risks and their impact on a pension fund’s ability to meet its changing liabilities over time in a single report, rather than looking at the two dynamics in isolation. The enhancements also offer clients an improved user experience with more informative graphics and intuitive visual information.”
The enhancements focus on:
Asset liability reporting: Northern Trust’s analytics now model both assets and liabilities and the data is brought together in one report to show comparisons of risk levels and potential risk mismatch alongside the managed assets. This means that it is possible to look at how investment risks would impact funding levels and the ability of a fund to meet its liabilities over time, as well as how changes in liabilities may open up opportunities to reassess investment decisions. The move is expected to aid clients in making informed decisions about more sophisticated liability management solutions.
Asset allocation: Enhanced active allocation and risk contribution reporting should allow clients to gain a deeper insight into their exposures on an asset class, region and sector basis, or manager selection decisions, and strengthens overall risk awareness.
Trend analysis: Broader trend analysis should offer clients greater awareness of the context in which current risks exist, facilitating enhanced risk mitigation strategies.
“We believe that these enhancements present our analysis of essential risk information in a clear and actionable format,” said Mr. Castledine. “Equally important, our risk reports, combined with the support of one of our expert consultants, can help create an effective dialogue around the investment process facilitating discussions between asset owners and their chosen investment professionals.”