Risk Management for Alternative Investments
Alternative investments offer the opportunity to capture alpha with correspondingly sophisticated layers and levels of risk. At BlackRock, we support our alternative investments managers with the highly developed risk management resources of our global firm. We want our clients to be fully informed about their portfolios’ risk characteristics and to have confidence in our unwavering commitment to monitoring that risk on their behalf.
Why choose BlackRock?
BlackRock’s dedicated risk professionals and systems testify to a culture that prioritizes risk management and compliance:
- We act as a fiduciary and we focus on being a stand-alone asset manager.
- Our global, independent Risk and Quantitative Analysis group works closely with investment professionals to monitor and manage risk.
- BlackRock SolutionsTM provides risk analytics and systems capable of 24-hour monitoring. They are used globally throughout much of the firm as well as by external clients.
We focus on holistically managing the four risk types typically associated with alternatives:
1. Investment risk: We believe that risk in every portfolio should be deliberate, diversified and appropriately scaled. Our layered view of investment risk encompasses primary (market), secondary and idiosyncratic risk.
2. Liquidity risk: We manage risks across the liquidity spectrum in keeping with the nature and requirements of various alternative strategies.
3. Operational risk: We assess and monitor internal controls and conduct extensive due diligence on all potential investments. We have extensive experience in negotiating, managing and diversifying counterparty risk via our Counterparty & Concentration Risk Group.
4. Organizational risk: We evaluate the structure, stability and quality of potential investments and consider factors such as capacity risk, asset base and underlying investor base.
“Keeping Risks in Check: How RQA and BRS help plans manage risk”
By Doug Bartholomew
Currents, Winter 2011
Learn more about BlackRock’s risk management capabilities.
(PDF) Download the Currents Winter 2011 issue