For Investors

Risk Fundamentals is a risk management and transparency solution for investors. It is designed to be the industry standard. The system provides comprehensive and standardized risk and return reporting that spans all investments and all types of risk (including liquidity, leverage, counterparty, best practices, operational, governance, and valuation risks). Risk Fundamentals's investor products include:

Risk Management – Risk Fundamentals provides a risk management solution that is both comprehensive and integrated. The system is comprehensive in that it measures all forms of risk facing investors. It is integrated in three dimensions, permitting investors to:

Analyze all of their holdings (traditional and alternative) together as if they held all the underlying positions of their constituent funds.
Make decisions based upon the broad universe of risks, which are interdependent, and should not be considered in isolation.
Not only manage beta risk, which is addressed by VaR and stress test measurements, but also “alpha risks,” which include the liquidity, leverage, and concentration risks that have been the primary causes of the majority of hedge fund blowups.

Transparency Reporting – Risk Fundamentals has created comprehensive, graphic, standardized transparency reports for funds to send to their investors. These reports present both accounting and risk based profiles of the funds.
“Best Practices” – Risk Fundamentals's partner, Capital Market Risk Advisors (CMRA), the world's preeminent risk management consultancy, has developed a highly granular, closed-form, hedge fund “Best Practices” questionnaire to address all of a hedge fund's business practices. This questionnaire has been incorporated into the system to generate statistics about a hedge fund's business practices in comparison to its peers.
Peer Universes – Risk Fundamentals allows investors to compare funds and funds of funds to peers in any of the RFStats, the system's summary risk statistics. The system creates both strategy (what the fund calls itself) and behaviorally (how the fund is actually constructed) based peer universes to which individual funds can be compared.
Performance Attribution – Risk Fundamentals analyzes returns, applying the same frameworks that are used to measure risk. Combining historical risk, return, and leverage attribution permits investors to explicitly measure retrospective risk adjusted returns for any of all of the innovative reporting frameworks that Risk Fundamentals supports.
Decision Support – Risk Fundamentals provides investors with decision support tools to proactively manage diversification, create risk-efficient portfolios, and analyze both static and dynamic risks. To this end, in addition to unique analytic frameworks to fundamentally measure and understand the sources of diversification, the system offers construction, style analysis, and hedging tools.
Counterparty Risk – Risk Fundamentals is the only risk system to measure counterparty risk – the risk of default from an investor or a fund's contract partners. Counterparty risk was a significant causal factor in the recent financial crisis and became a major concern with the collapse of Lehman Brothers.
Limit Monitoring – Risk Fundamentals supports both hard limits (those that cannot be violated, such as explicit mandates) and soft limits. The system informs specified personnel of exceptions on a real-time basis, tracks the resolution of limit violations over time (including expediting), and provides ex-post analysis of both the causes of violations and their handling.
Risk Budgeting – Risk Fundamentals was explicitly designed to support a formal risk budgeting process.
Standard Summary Stats/Analytic Tools – Risk Fundamentals has been designed to provide a fundamental understanding of risk and to explain causality. The intuitive user interface includes both an interactive visual dashboard and ad-hoc reporting and analysis tools that allow, among other things, easy downloading of data into Excel. This creates a new paradigm in due diligence.
Valuation (Coming Soon) – Risk Fundamentals is working with CMRA to create an associated valuation service to be available for the end of 2009.