Minimising risk to maximise reward in a fledgling American asset management institution

In the high-stakes world of international investing, success hinges not just on seizing opportunities, but on mastering the art of risk management. Market efficiencies have long since made the adage ‘the greater the risk, the greater the reward’ redundant – now, every investment management firm needs to have optimised its internal systems to ensure that it operates effectively. 

For new players entering the American marketplace, it is even more important. Wall Street in New York has established itself not just as the home of the US financial markets but the heart of global capitalism because only the strongest survive in such a cut-throat landscape. Risk management must be one of the top priorities for organisations operating in this environment given the high levels of regulatory scrutiny, fierce competition and market volatility associated with the industry. 

Tactical and strategic asset allocation is another critical aspect of operations that has a massive bearing on the performance and growth of such a business. Effectively identifying and exploiting short-term market conditions through tactical asset deployment can bolster credibility and drive growth during the important early phase of an organisation’s business journey. 

Meanwhile, strategic asset allocation means putting the well-established principles of portfolio allocation, optimisation and diversification into practice. Building for long-term success in this manner requires empirical experience and understanding if organisations are to become marketplace mainstays. 

Our nascent client faced this exact situation as it needed to establish its asset allocation and risk management capabilities on its way as it sought to become a significant player in the competitive US market. While they were able to bring high-calibre people in other key roles, identifying experienced individuals who could build entire systems was an altogether tougher task. Fortunately for them, they had Hyphen to support them in tackling this challenge. 

The key requirement for our client was they needed system builders, rather than practitioners or optimisers. Fortunately for our client, Hyphen’s service offering is especially relevant to situations in which organisations require individuals or teams capable of addressing problems through the practical use of relevant experiences. 

We identified two professionals with a combined total of nearly 30 years of experience in creating and implementing tools, software and analytics resources. Their resumes contained the names of several very reputable organisations and impressive job titles, while both possessed the technical knowledge needed by our client. Having previously built similar models for top-tier institutions in the United States, it was clear that their combination of hands-on experience and industry and cultural knowledge made them a perfect fit for this particular engagement. 

Once onboarded, they quickly set to work in helping the client at a strategic level, laying the necessary groundwork for the business to address its problem. This involved meticulously designing a comprehensive risk management framework tailored to the company’s unique objectives and risk profile, creating detailed policies and procedures, and developing training programmes to foster a culture of risk awareness. In addition, the team leveraged technology and tools to support their efforts, integrating risk management seamlessly into the company’s wider infrastructure. 

Through their diligent efforts in packaging and presenting their approach, the team successfully laid the foundation for our client to swiftly position itself for long-term success and stability in an increasingly complex and dynamic market environment

The pair of industry veterans we brought in made the difference – in more ways than one. Their work went beyond building the risk management systems our client required; they also have since played an active role in training the team that will be responsible for using these systems. 

This is not just passing on a training manual; they have also used their practical experience to directly address pain points before they grew into serious issues. This is another example of how Hyphen’s belief in providing our clients with professionals possessing hands-on experience leads to first-rate project delivery. 

Work also continues on enhancing the design and adding further features to the technological tools developed during the initial phase of the project. Our involvement with this client has since expanded into other areas, too. We have also spotlighted specialist quantitative modellers for use on a part-time basis, while we are now collaborating on new aspects of our client’s operations. 

This represents a significant contribution to a growing business with globally significant aspirations, one that will derive long-term reward from the risk management work of our professional partners. Our team’s work also illustrates the value that cross-functional teams of experts and professionals can offer by offering practical experience to develop effective solutions capable of addressing major corporate challenges.