Issue 11 2019

CEO MONTHLY / ISSUE 11 2019 9 RiskFirst : 10 years of shaking-up pensions and investment is therefore now crucial, and PFaroe is a key facilitator of this. Calculations that previously might have been run overnight can now be completed in minutes, transforming decision-making. Unique features of PFaroe: • asset owner focused • detailed analysis on both assets and liabilities – allowing a comprehensive understanding of the overall position of a plan or portfolio; • on-demand information, with live ‘what if’ functionality – enabling fast, agile reactions to market changes; • long- and short-term modelling – addressing the short-term focus of asset managers and the long-term objectives of asset owners; • strong, multi-asset coverage – comprehensive asset modelling capabilities cover complex alternative asset classes and illiquid assets; • enriched industry collaboration through its extensive reach and centralised platform; • user-friendly analytics that facilitate effective, engaging pitches; • extensive market presence provides opportunities for asset managers to increase their distribution networks. Dedicated innovators Innovation is at the heart of the business, and RiskFirst is continually evolving PFaroe and launching new solutions targeted at enhancing the institutional investment market, particularly endowments and foundations and the front-office of investment managers. “RiskFirst thrives on continually helping pension plans gain a better understanding of risk, make better decisions and capture de-risking opportunities through the use of innovative technology solutions,” says Seymour. “We work with clients to provide the support and tools they need to enhance and grow their businesses – delivering comprehensive and innovative solutions that make and save our clients money.” As part of its commitment to innovation, RiskFirst formed three ground-breaking partnerships in 2018/19, further cementing PFaroe’s position as the risk management platform of choice for the pensions industry, and adding significant value to the market as a whole. Firstly, RiskFirst and STOXX launched the first independent set of liability driven investment (LDI) indices targeting the needs of UK pension plans; allowing increased insight and more accurate comparisons of asset manager performance for the LDI market. It was previously believed that the market was too complex for such an initiative, making this a particularly innovative development for the LDI space. Secondly, together, RiskFirst and Insight are enhancing the ease of fund modelling for the UK DB pensions market, with data on Insight’s funds now accessible in PFaroe. This is transforming how clients can view and analyse funds, creating a central point of access that improves transparency, convenience and efficiency. Thirdly, RiskFirst’s final partnership links PFaroe with the longevity analytics produced by Club Vita. Valuations can therefore be run with ease within PFaroe, enabling fast and customised mortality projections. Seymour comments: “Our products are continually being developed and adapted to address changing market needs and to join up analytics so that clients can rely on scalable, leading-edge products that are flexible, intuitive and ever- evolving.” Reaching new markets In another ground-breaking project, RiskFirst is developing a set of cutting-edge solutions for the asset management community that could transform the way asset managers incorporate risk and attribution into the investment process. RiskFirst consulted with the market for 18 months to obtain a thorough understanding of stakeholders’ needs. It became clear that existing solutions were typically legacy systems, built on an overnight batch process, with every stakeholder using a different system/model to meet their specific needs: • Portfolio managers require fast, detailed, daily information • The middle office needs a robust, scalable system with monthly updates • Asset owners and consultants need a holistic view across the portfolio Despite these differences, RiskFirst identified that the underlying needs of the different stakeholders are in fact aligned. RiskFirst has therefore built a next generation risk and attribution solution – PFaroe Attribution – which is a common platform for all stakeholders, bringing together intelligent, modern technology and flexible attribution. RiskFirst’s solution seeks to embed attribution firmly into portfolio managers’ strategies and pre-trade process; providing the ability to make decisions and allocate asset owner capital based on attribution trends from the decisions they have made over time. Both asset owners and portfolio managers are therefore provided with greater transparency and understanding of whether decisions paid off, and at what cost in terms of risk. The next chapter As part of its next stage of growth, RiskFirst joined Moody’s Corporation during Q3 2019 and now operates under Moody’s Analytics. With a global presence and a number of synergistic products and expertise, Moody’s Analytics will allow RiskFirst to expand the reach of its existing solutions and broaden its offerings. “The combination of Moody’s Analytics scale, reach and capabilities with our leading solutions and extensive customer base creates an incredibly strong value proposition,” says Seymour. “It gives us enhanced capabilities while building on what has made us so successful to date: a sophisticated, technically excellent product combined with superior service and support. We are excited to embark on this next chapter of RiskFirst’s journey with Moody’s.” As part of this, RiskFirst plans to accelerate its growth further into attribution and the buy-side, providing more functionality for the front office of investment managers and extending geographically, including expansion into Canada. In the 10 years since RiskFirst launched, it has delivered astonishing growth. It is making real value-added change to risk management across the pensions and investments space, and continues to progress and develop its offerings through technological innovation and cutting-edge partnerships. As RiskFirst celebrates 10 years of success, the future looks bright.