Is it Time for Ex-Ante Risk and Real-Time What-If Analysis for the Buy-Side?
Increase in market volatility and other risk factors such as inflation concerns require the ability to analyze client portfolios for 'factor' shocks—FX, spreads, inflation, index changes, and more.
The Competitive Advantage
Having the capability to analyze portfolios using hypothetical scenarios in 'real-time' will be a key competitive differentiator for buy-side firms managing multi-asset portfolios.
Results of such forward-looking analysis in a Business Intelligence dashboard—along with Performance (ex-post) and accounting data—is a must not only for pro-active portfolio management but also for communication of the same to investors.
Key Challenges to Execution
The path to real-time risk analysis isn't without obstacles:
- Legacy system integration: Most firms have fragmented data across multiple legacy systems that weren't designed to work together
- Third-party system connectivity: Integrating with custodians, administrators, and market data providers adds complexity
- Robust data model requirements: Real-time analysis requires a unified data model that can handle multi-asset complexity
The Right Team Makes the Difference
For successful execution, it is necessary to have a team with the right mix of 'experienced' domain and technology background—folks who have been there and done that.
This combination of investment management expertise and modern technology capabilities is essential for delivering solutions that actually work in production environments.
The Bottom Line
The question is no longer whether buy-side firms need forward-looking risk analytics—it's how quickly they can implement them. Firms that move now will have a significant advantage in serving clients who increasingly expect real-time visibility into their portfolio risk.