Risk Management

Risk Management

The Investment Team defines risk as the permanent loss of capital. This occurs when the fundamentals of a business deteriorate or the equity market ascribes its shares a lower valuation. They in turn materialise either through a change in, or an incorrect assessment of a company or its value. With regards to a change, the team aims to reduce the probability of a permanent loss of capital by investing in strong companies that are better positioned to withstand economic disruption. On the latter issue of an incorrect assessment of a company or its value, the investment process and Investment Committee is structured to promote dynamic and effective decision making.

River Global Investors (RGI), parent company of Ocean Dial Asset Management, employ a rigorous risk management process and utilise a range of tools, both third-party risk and internal monitoring systems, to help manage risk at a portfolio level. The first line of defence for risk management sits with the individual investment professionals. Whilst portfolio risk is monitored daily, RGI carry out a formal review on a quarterly basis. This is led by a dedicated Risk & Performance Analyst sitting outside the Investment Team, providing independent oversight of the fund managers. The review includes style and factor risks, and scenario analysis. The Risk & Performance Analyst, who reports to the Group Chief Risk Officer (CRO) is independent from the Portfolio Managers and while the Risk &Performance Analyst does not force decisions, they will raise identified issues to the Portfolio Manager and will determine if action is required to rectify any deviations away from suitable guidelines and/or limits.

If the Risk Manager identifies that the Investment Team is taking excessive risks or that they are not adhering to the risk limits as per the investment objective and investment guidelines (or if any other issue is identified which requires escalation further than the Portfolio Manager), then the Risk & Performance Analyst will escalate to the Group CRO, and subsequently to the Group CEO, as required.