AXIOMA RISK A HIGHLY CONFIGURABLE MODEL THAT’S TRULY INTERACTIVE

Axioma is a leading provider of equity risk-management and portfolio-construction solutions. Global Banking and Finance Review spoke with Lev Zaks, Senior Director at Axioma about their entry into the multi-asset class risk management/modeling space with the introduction of Axioma Risk, risk-management platform for risk officers, portfolio managers, asset owners and consultants.

xioma risk a highly configurable model that’s truly interactive

What are the main trends within institutional portfolio management that led to the creation of Axioma Risk?
Axioma has been tremendously successful with our equity products so our clients have naturally been pushing us to move into the multi-asset class space. Particularly since the financial crisis risk management has been the top of the agenda and firms are looking for Axioma to provide a consistent view across their book.

In reviewing the risk processes there is a recognition within institutional portfolio management that the view of risk that the portfolio manager has needs to be consistent with the view that the risk control teams presents as part of the risk framework, whether that be regulatory, management or client reporting.

The Axioma Risk platform marries the various approaches to risk – factor models, VaR, stress testing, simulation – to enable client to take a holistic perspective on the risk within their portfolios

How does the use of cloud technology help ensure clients’ data is protected?
We’ve architected the system itself so that so that there is a choice of deployment options. Either the entire system can be hosted on the cloud where the clients are able to access it or a component can be hosted with the client, which ensures confidentiality of portfolios. In this case, at no time are the full client portfolios available on the cloud. The cloud provider we are using is Microsoft. In both the architecture and in our choice of cloud providers we have kept client data protected.

In the ever changing regulatory environment, how are regulatory requirements impacted if at all?
The ever changing part is something that several of the charter group members mentioned. The regulations seem to be changing quicker than before and they were looking for a system that could keep up. To meet the reporting requirements, the system can act as a standalone or can be incorporated into other reporting engines, while the analytic capabilities are sufficiently flexible to be able to provide a range of statistics, so as the requirements change so can the statistics

How has the roll out gone so far and what feedback have you received?
Charter members have begun implementation of the system are using this as a replacement for exciting processes. It is not a complicated system and it takes little effort to put the system in place. Often the work is getting around getting their systems to normalize the data. As a result, it takes a while to implement properly but the feedback has been positive, members appreciate the flexibility. It is highly customizable and adaptable and they appreciate being able to make these customization on their own rather than with an Axioma specialist.

Any new products or services scheduled for 2014?
With Axioma Risk arriving in the market in the fall of 2013 there is plenty of work that our clients and prospects are asking to be developed. We listen to their requirements rather than develop a theoretical roadmap. Some of the areas that we’re hearing about are more complex structured products and derivatives; more exotic commodities, while the asset owners are looking for the more illiquid asset classes – private equity, physical real estate, infrastructure. But, of course, we need to be flexible to the change requirements that the markets and regulators impose on our clients.

Axioma is a leading provider of equity risk-management and portfolio-construction solutions. Global Banking and Finance Review spoke with Lev Zaks, Senior Director at Axioma about their entry into the multi-asset class risk management/modeling space with the introduction of Axioma Risk, risk-management platform for risk officers, portfolio managers, asset owners and consultants.

xioma risk a highly configurable model that’s truly interactive

What are the main trends within institutional portfolio management that led to the creation of Axioma Risk?
Axioma has been tremendously successful with our equity products so our clients have naturally been pushing us to move into the multi-asset class space. Particularly since the financial crisis risk management has been the top of the agenda and firms are looking for Axioma to provide a consistent view across their book.

In reviewing the risk processes there is a recognition within institutional portfolio management that the view of risk that the portfolio manager has needs to be consistent with the view that the risk control teams presents as part of the risk framework, whether that be regulatory, management or client reporting.

The Axioma Risk platform marries the various approaches to risk – factor models, VaR, stress testing, simulation – to enable client to take a holistic perspective on the risk within their portfolios

How does the use of cloud technology help ensure clients’ data is protected?
We’ve architected the system itself so that so that there is a choice of deployment options. Either the entire system can be hosted on the cloud where the clients are able to access it or a component can be hosted with the client, which ensures confidentiality of portfolios. In this case, at no time are the full client portfolios available on the cloud. The cloud provider we are using is Microsoft. In both the architecture and in our choice of cloud providers we have kept client data protected.

In the ever changing regulatory environment, how are regulatory requirements impacted if at all?
The ever changing part is something that several of the charter group members mentioned. The regulations seem to be changing quicker than before and they were looking for a system that could keep up. To meet the reporting requirements, the system can act as a standalone or can be incorporated into other reporting engines, while the analytic capabilities are sufficiently flexible to be able to provide a range of statistics, so as the requirements change so can the statistics

How has the roll out gone so far and what feedback have you received?
Charter members have begun implementation of the system are using this as a replacement for exciting processes. It is not a complicated system and it takes little effort to put the system in place. Often the work is getting around getting their systems to normalize the data. As a result, it takes a while to implement properly but the feedback has been positive, members appreciate the flexibility. It is highly customizable and adaptable and they appreciate being able to make these customization on their own rather than with an Axioma specialist.

Any new products or services scheduled for 2014?
With Axioma Risk arriving in the market in the fall of 2013 there is plenty of work that our clients and prospects are asking to be developed. We listen to their requirements rather than develop a theoretical roadmap. Some of the areas that we’re hearing about are more complex structured products and derivatives; more exotic commodities, while the asset owners are looking for the more illiquid asset classes – private equity, physical real estate, infrastructure. But, of course, we need to be flexible to the change requirements that the markets and regulators impose on our clients.